Government Loan to Virgin Australia

[Potsie Weber]

Air Asia? They are in a horrible position, unprofitable even before corona, bleeding cash, unable to pay leases, very few assets to sell, under investigation for corruption (Airbus bribes), and offering ridiculous fares like $181 for unlimited 12mths travel to Malaysian based loyalty members in an attempt to get some cash.

https://www.traveller.com.au/airasia-x-offers-a-years-unlimited-flights-for-181-in-response-to-coronavirus-h1m73n

No doubt Lion group is under the same pressure with a huge fleet of leased aircraft with very limited ability to pay, and limited assets to borrow against.

The same goes for low cost airlines all around the world that have generally operated on tight margins with everything leased.

I don’t think it will be long before leasing companies start repossessing huge numbers of aircraft due to the inability of airlines to pay leases or even ensure aircraft are stored and maintained appropriately.

[machtuk]

"IF" VA got the $1.4blll loan under whatever terms how will this fix what was already a floundering Airline pre all this hysteria and fear? Virgins where bleeding $$$$ & they where good at it, the black hole in the VA bucket is still there and growing bigger! Personally I can't see them coming back from this. RIP -(

Its a brave new world out there coming!

[normanton]

I keep coming back to the same question. If they aren't profitable now, how will they be profitable post-COVID19 with an extra $1.4b in debt? They can't, and they won't. Fold the company now so that workers get what they are entitled to, and hopefully the administrators can save something.

I don't follow the argument of "they were going to be profitable in x years". Yeah! Just like the governments budget will be back in surplus in x years! Look how well that always turns out.

Scurrah is clinging at straws here, and it's his job so fair enough. But the Australian tax payer shouldn't be bailing out a foreign (government) owned company when the major (foreign) shareholders are coming up with nothing.

[B772]

Scurrah appears to be in panic mode. History will show he did little to restructure since he was appointed over 12 months ago. As little as 3 weeks ago he did not understand the seriousness of the situation. In one of my posts I referred to an announcement he made as being a weak effort. Now he appears to be shoring up his position as the collapse of VA will not look good on his C.V for future employment. A little like Gary Toomey. A rooster one day, feather duster the next.

If Scurrah thinks he can get a letter of comfort or a statement of confidence from the Government he is dreaming. Even HostPlus Superannuation will not get anything from Canberra. As I have indicated previously it will be a slow uncomfortable wind down unless the current owners throw more money in the bottomless pit. I believe they will walk away from VA.

[DanV2]

Scurrah appears to be in panic mode. History will show he did little to restructure since he was appointed over 12 months ago. As little as 3 weeks ago he did not understand the seriousness of the situation. In one of my posts I referred to an announcement he made as being a weak effort. Now he appears to be shoring up his position as the collapse of VA will not look good on his C.V for future employment. A little like Gary Toomey. A rooster one day, feather duster the next.

If Scurrah thinks he can get a letter of comfort or a statement of confidence from the Government he is dreaming. Even HostPlus Superannuation will not get anything from Canberra. As I have indicated previously it will be a slow uncomfortable wind down unless the current owners throw more money in the bottomless pit. I believe they will walk away from VA.

Tell that to a number of "SQ fanboys" on Executive Traveller (aka AusBT) that.. a number of them are still holding onto the ol 'SQ will rescue VA !!111!" sthick, despite the numerous 'SQ will rescue VA' articles over the past five years fizzling out as "fake news".

To be fair to those fanboys, SIA also did have the opportunities to 'buy out' VA in the past, notably during the NZ exit, SIA simply chose not to.
I suspect that would've paid off for SIA in the long term rather than mindlessly buy a long-term basketcase riddled with billions in debt.

[Turnleft080]

Quite frankly I hope all airlines survive, though I hope all the airports drop dead. Atrocious leasing costs, landing fees etc. Funny all car parking is free though.
Everyone on this site should be attacking these hypocrites first not the airlines.

[Paragraph377]

Quite frankly I hope all airlines survive, though I hope all the airports drop dead. Atrocious leasing costs, landing fees etc. Funny all car parking is free though.
Everyone on this site should be attacking these hypocrites first not the airlines.
Oh c’mon, corporate greed is everywhere. The airlines gouge specific airports (regionals) and the airports (mainline) gouge the airlines. Its double dutch. Everyone is out to make a quid when the times are good, and when times are bad they cry that they are being ripped off.

Make no mistake, Scurrah will go, and then pop up again somewhere else and/or on a couple of Boards. But he screws around for 12 months. Virgins position was dire when the little Italian jumped ship. Scurrah has played tiddly winks when he should have ripped the guts out of the center of the business to get it back on track.

Staff should be rightly pissed at how he has spent precious dollars on foolish advertisements trying to shore up public sentiment. Problem is, Virgin hasn’t been hard done by Qantas, it’s been hard done by its own Board and Executives, and now the chickens have come home to roost. It is almost criminal.

[krismiler]

In the Uk, Virgin Atlantic are also seeking a government bail out with no sign as yet that it's likely to be forthcoming, most airlines will be on the ropes by the end of May anyway and with the current financial situation, no government will be able to bail out every company in every sector of the economy. Delaying aid forces shareholders to contribute their money first and undertake unpopular restructuring to cut costs, governments will step in at the last minute and aid those still standing so that essential services can be maintained.

British Airways will probably come through this though it will need help and possibly even be nationalised. The difference compared to Qantas is that air travel within the UK isn't vitally important. The country is small, densely populated and has an extensive road and rail network. The UK is a major hub with multiple foreign airlines flying in so there are many alternatives available for those wanting to travel internationally. KLM fly to more UK airports than British Airways do, and enable connections through Amsterdam.

Australia is as dependent on air travel as the USA which has given aid to it's major airlines, The Americans are no doubt concerned about a monopoly if two of the big three go under and can't be favouring one a single carrier.

[B772]

Paul Scurrah will not be happy to hear EL AL who are on the verge of collapse have been told by the Israeli Finance Ministry there request for $700M to stay afloat has been rejected. Anyone who had less than 5 years of service regardless of their position was laid off last week.

[The Bullwinkle]

Qantas won't be allowed a monopoly, even if it gets nationalised and fares are regulated by the government, the unions would be in too strong a position if they could simply ground the whole country if their demands weren't met.
Don't you mean the Irish despot?

[krismiler]

It's also quite possible that a doomsday rescue package has already been worked out and is currently locked in a filing cabinet in Canberra. At the last minute, after weeks of pleading when it's obvious the airline is about to go under it will be unveiled. A reduction in size, redundancies, pay and conditions slashed, take it or leave it. A deal that would probably be voted down at the moment as unacceptable would be welcomed by employees and shareholders.

[longjohn]

The doomsday rescue package HAS been worked out. It’s called 2001 REPLAY.......

The market will take years to recover, why have 2 players painfully limping on rather than one moderately strong player?

Control the monopoly with regulation.

Guarantee VAH employee entitlements.

What Scurrah & co don’t get is the sound of silence. If govt were ready with a definitive solution, we would have it. The lack of one indicates there will likely not be a rescue.

Its kinda getting awkward now, I suspect many in govt & elsewhere are just wanting VA to go away and quietly disappear. Then they can focus on entitlements and controlling QF. Maybe Scurrah does in fact get that, hence the ads, but it ain’t going to change anything.

Meanwhile, the poor bloody employees are seeing their entitlements whittled away week by week.

Hope won’t help pay bills, redundancy will.

[Icarus2001]

Guarantee VAH employee entitlements. They are already guaranteed.

https://www.ag.gov.au/industrial-relations/fair-entitlements-guarantee/Pages/default.aspx

Meanwhile, the poor bloody employees are seeing their entitlements whittled away week by week.

They are not seeing that at all.

[Arctaurus]

I don't think the guarantee covers all staff scenarios - it's a safety net of last resort only where extended leave etc is involved. Won't cover superannuation.

[crosscutter]

I can see further industry support on the way...a package that supports the airports as critical infrastructure as well as the airlines. SYD airport will not be allowed to fail and it has massive debt repayments approaching. I note QF have stopped paying the airports. I suspect a package that addresses this will be forthcoming. It's not what Virgin want, but it controls more of the fixed costs for airlines and the lost revenue for the airports.

[non_state_actor]

 They are already guaranteed.

Sort of. The entitlements are capped so for any pilot you will not be getting 100% what you are owed. The government pays up to the cap then you have to apply as a creditor for the rest of what you are owed, which will end up being peanuts I'm guessing.

Makes a certain member of the executive teams $9 000 000 bonus last year just because they bought back their amazing Frequent Flyer program look pretty galling. I wonder what they value it at now?

[B772]

ampclamp. Whilst being interviewed on ABC breakfast radio Paul Scurrah effectively said 90% of the shareholders in VA indicated there were no funds available for VA. He went on to say VA were attempting to raise from other sources. In my opinion the only option would be to sell owned assets such as aircraft. If the assets were required in the future it could be a sale and leaseback. As there is uncertainty re the future of VA the lease rates would be prohibitive on a sale and leaseback arrangement.

[The Bullwinkle]

The Morrison government appears to have ruled out any further support for the aviation sector, having already piled millions of dollars into an industry that has suffered at the hands of coronavirus.

Deputy Prime Minister Michael McCormack insists he wants all of Australia's airlines to come through the other side of the pandemic.

"We realise it's going to be very, very tough for them. COVID-19 is having a devastating effect on regional, domestic and international travel and we want to make sure that our aviation industry is protected," he told parliament on Wednesday.

"That's why the federal government is providing and has provided more than a billion dollars of support for aviation."

But Labor is urging the Morrison government to extend an additional financial lifeline to Virgin Australia, otherwise it will put hundreds of jobs at risk and damage the two major airline structure that has successfully supported the economy.

Virgin Australia, which is foreign owned, is seeking a $1.4 billion line of credit and a "statement of confidence" similar to what the government would grant the major banks.

Labor's transport spokeswoman Catherine King told parliament, during a debate on the $130 billion JobKeeper package, the government must extend a lifeline to Virgin.

"If it does not, it is taking an active decision to see one of our major airlines fail in this country, and that will have significant consequences for hundreds of workers in the aviation sector and across our economy to come," she said.

Virgin Australia boss Paul Scurrah warned the nation cannot afford to emerge from the pandemic with just a monopoly airline.

"We are not looking for a bailout," he said in an interview with The Australian.

"We are asking the government for a bridging facility and working with them to make sure there is confidence that people can look forward with certainty that there will be a competitive and robust airline industry coming out of the crisis."

Virgin Australia is 90 per cent owned by Etihad, Singapore Airlines, two Chinese conglomerates and Richard Branson's Virgin group.

Prime Minister Scott Morrison has previously cast doubt on the prospect of a lifeline.

Ms King welcomed the cash injection the government has already offered to around a dozen regional airlines and said it indicates the government is prepared to cushion businesses through this crisis.

"Labor believes the government must be flexible and be open to financially supporting our large aviation companies, including extending or guaranteeing lines of credit or taking an equity stake in the industry," she said.

"Such interventions will ensure that when the industry bounces back - and it will - government can recoup on its investment.

Mr Scurrah said the future of carrier's 9500 staff was dependent on the government's support.

"The federal government wants to emerge from this crisis with two airlines," he said.

"And without us, it is not going to have one. We all know what would happen if there was a monopoly."

I've generally been a conservative voter all my life (although I did vote for Keating) but if this is the current state of play, I'll certainly have to consider my options at the next election!

[Buster Hyman]

It'll be a few years before there's enough demand for 2 airlines, IMHO.

[galdian]

I've generally been a conservative voter all my life (although I did vote for Keating) but if this is the current state of play, I'll certainly have to consider my options at the next election!

Think the govt has more than enough to worry about than your vote....how many years down the track??

PS being honest that the owners - whose political/business crossovers are extensive - will not kick in funds could be seen as laying the (final) cards on the table.

There will never be a monopoly if VA go bust - first of all you need a travelling public TO monopolise, either government will facilitate the growth/induction of a new player (Alliance/Lion/PussyVirgin returning to its basics under the Tiger AOC....you know, the good old days when VA made money before delusions of adequacy/capability set in...whomever) and probably force QF to play nice until the market is better represented.

The owners aren't prepared to shore up their investment and wait/hope better days - yet the Australian govt should??

Yeah/nah....IMHO.

[Ragnor]

SMH storey up now, labour has put pressure on the Government to bail VA out with the 1.4B they asked for. Why should the Australian tax payer bail out a foreign owned business!

[KRUSTY 34]

In my junk email this morning was this incredible offer! Not quite up there with a Nigerian scam, but surely sailing close to the wind to be encouraging any expenditure on travel at the moment? I suppose the odd mug will see this as a deal not to be missed...

Dear Velocity member,



We want to let you know about some important changes we’re making to Velocity Global Wallet® from 4 May 2020 under our new Product Disclosure Statement (PDS).



* We’re reducing fees you pay when using your Velocity Global Wallet® card, including removing the 2.25% currency conversion fee2 (foreign exchange rates apply), supplementary card issue fee, and the $1.95 ATM transaction fee.

* You’ll earn 1 Velocity Point for every AU$4 spent in Australia on qualifying purchases.1

* No more ATM transaction fees when withdrawing cash in Australia and overseas.3

* We’re introducing a new load method via VISA/ Mastercard which will have a 0% load fee when loading into a foreign currency wallet, or 0.5% when loading into your AUD.



The updated PDS also includes the following important changes:







* Your Overseas earn rate remains the same, 2 Velocity Points for every AU$1 spent, on Qualifying Purchases.

* You will now earn 1 Velocity Point for every AU$4 spent, on Qualifying Purchases in Australia.1

* The Inactivity Fee will change to 0.5% of the Available Balance, with a minimum of AU$1 for accounts that have been inactive for 12 months.

* BPAY will still be FREE when you load into a Foreign Currency Wallet, and will have a fee of 0.5% of Funds Credited when you load into your Australian Wallet, with a minimum of AU$1 per Load.

* We’ve updated section 17.5 to indicate the assumptions you might be liable for losses arising from Unauthorised Transaction if you contributed to those losses through fraud, theft, illicit use or by inappropriate use of the card and PIN. These assumptions only apply to a very small number of transactions, losses will still be covered for most customers.

* We’ve updated the definition of Qualifying Purchases that allow you to earn Velocity Points, and included a section to explain you might stop earning Velocity Points if you use the product in a fraudulent or illicit way.

* We’ve updated the section where we describe what happens with Card Inactivity and Account Closure

Bloody Hell!

They’re still employing someone to come up with that crap?

[ampclamp]

[QUOTE][ampclamp. Whilst being interviewed on ABC breakfast radio Paul Scurrah effectively said 90% of the shareholders in VA indicated there were no funds available for VA. He went on to say VA were attempting to raise from other sources/QUOTE]

Thanks B772, that is the first I've heard. Interesting.

Given it is a publicly traded company, that info, even if implied, is surely market sensitive.

If it is the case, the market needs to be equally informed. I think most holders likely assume the major holders will not support VAH any longer, but revealing that in an interview could be a breach of asx rules.

[wheels_down]

[QUOTE][ampclamp. Whilst being interviewed on ABC breakfast radio Paul Scurrah effectively said 90% of the shareholders in VA indicated there were no funds available for VA. He went on to say VA were attempting to raise from other sources/QUOTE]

Thanks B772, that is the first I've heard. Interesting.

Given it is a publicly traded company, that info, even if implied, is surely market sensitive.

If it is the case, the market needs to be equally informed. I think most holders likely assume the major holders will not support VAH any longer, but revealing that in an interview could be a breach of asx rules.
He didn’t say those words exactly. It’s more how you think it was to be interpreted, in your words. It was neither confirm or denial you could draw many strings from that.

[Cessna Jockey]

I’ve got many friends with Virgin and I really feel for them and their coworkers. I wish them the best out of all of this and hope they do make it through.

But let’s get real: we have a liberal government in power who are notorious for privatising everything and anything they can get their hands on. Government ownership of an airline goes against everything they believe in.

But it will be a Monopoly you say? Yes I’m sure that was a big concern when they privatised our airports, power stations, etc etc.

[Flava Saver]

Plenty of good mates in VA. It’s not their fault. But a foreign owned outfit that hasn’t been able to get their stuff sorted after how long, beggars belief. If their OWN investors won’t stump up to keep their interest afloat, why the F should my tax paying dollars do it? Does it pass the pub test. Hell no.

Bit over the campaign on social media to lobby the government too. Bloody upset so much for my mates, but at the end of the day you flog something so much, it will stop.....most will comprehend this.

[CamelSquadron]

Plenty of good mates in VA. It’s not their fault. But a foreign owned outfit that hasn’t been able to get their stuff sorted after how long, beggars belief. If their OWN investors won’t stump up to keep their interest afloat, why the F should my tax paying dollars do it? Does it pass the pub test. Hell no.


Doesnt really pass any test. Any Federal Government support should, at a minimum, be dependent on the injection of a significant amount of equity from the current owners or from new investors.

As it currently stands as a business, VA has negative value. The shareholders know this better than everyone else and dont want to throw in more good money in after bad money. If they thought it had positive value they would be willing to try to save the business by injecting capital. If they didnt have the funds available then they would monetise their "valuable" shareholding by selling to another investor - but you cant sell something that has negative value.

Scurah is doing what any good minded CEO would do - trying to save the company for the benefit of the staff.

[ABP]

SMH storey up now, labour has put pressure on the Government to bail VA out with the 1.4B they asked for. Why should the Australian tax payer bail out a foreign owned business!
Maybe the same reason where Australians give money to and fly on foreign owned airlines when travelling overseas - for the benefit of cheaper flights through competition.

[John Citizen]

we have a liberal government in power who are notorious for privatising everything and anything they can get their hands on.

Actually privitisation in Australia was started by the Hawke Labor government.

Privitisation in Australia (https://en.m.wikipedia.org/wiki/Privatization_in_Australia?wprov=sfla1)

[Cessna Jockey]

Actually privitisation in Australia was started by the Hawke Labor government.

Privitisation in Australia (https://en.m.wikipedia.org/wiki/Privatization_in_Australia?wprov=sfla1)

Correct....starting with commonwealth bank and Qantas, arguably companies with plenty of competition in the private sector.

I think you’ll find monopolies like Sydney Airport Corp have Liberal fingerprints all over it. But I could be wrong.

And for the record, I’ve voted AGAINST both sides over the years and dislike them all. Sorry for the politics.

[AerialPerspective]

Correct....starting with commonwealth bank and Qantas, arguably companies with plenty of competition in the private sector.

I think you’ll find monopolies like Sydney Airport Corp have Liberal fingerprints all over it. But I could be wrong.

And for the record, I’ve voted AGAINST both sides over the years and dislike them all. Sorry for the politics.

Commonwealth Bank and Qantas yes, part of Telstra also... but not for ideological reasons, in fact the opposite. They just did what the Liberals had been rabbiting on about for decades but never had the guts to do.

[lucille]

Sell that totally useless, money incinerating ABC and use the funds to prop up VA. The difference in work ethic, culture and broad custom satisfaction is palpable.

[Slezy9]

Sell that totally useless, money incinerating ABC and use the funds to prop up VA. The difference in work ethic, culture and broad custom satisfaction is palpable.

Who exactly would would want to buy the ABC? Seems like your being a little unfair on the ABC workforce? Do you know each of them personally?

[directimped]

Sell that totally useless, money incinerating ABC and use the funds to prop up VA. The difference in work ethic, culture and broad custom satisfaction is palpable.
​
Wow.....

Clearly you don't watch ABC programming. Clearly you don't live in a bushfire/natural disaster prone area. Selling a priceless public asset that benefits millions of people to prop up a failing airline would have to be one of the worst ideas I have ever heard in my entire life.

​​​

[dr dre]

​
Wow.....

Clearly you don't watch ABC programming. Clearly you don't live in a bushfire/natural disaster prone area. Selling a priceless public asset that benefits millions of people to prop up a failing airline would have to be one of the worst ideas I have ever heard in my entire life.

​​​

It’s hillarious how those who loathe the ABC with a passion (as the media they consume tells them to) almost certainly don’t watch it. It’s telling how two of the ABC’s biggest critics (The Australian and Sky News) went down to a skeleton staff over the Xmas/NYE bushfire period and provided almost no useful help.

Want to save taxpayer dollars to save aviation jobs? Maybe cancel some of the handouts and cushy contracts awarded to those loss making News Ltd entities from the current federal government no one seems to talk about.....

[das Uber Soldat]

It’s hillarious how those who loathe the ABC with a passion (as the media they consume tells them to) almost certainly don’t watch it. It’s telling how two of the ABC’s biggest critics (The Australian and Sky News) went down to a skeleton staff over the Xmas/NYE bushfire period and provided almost no useful help.

Want to save taxpayer dollars to save aviation jobs? Maybe cancel some of the handouts and cushy contracts awarded to those loss making News Ltd entities from the current federal government no one seems to talk about.....
And what, the people who criticize fox news watch it religiously do they?

Criticism of news organisations that don't share ones political beliefs is hardly the domain of any political persuasion.

[B772]

No mention of the Labor Victorian Government being broke due to the activities of the VEDC (Victorian Economic Development Corporation) and the Tricontinental Merchant Bank which almost brought down the State Bank of Victoria. The Federal Labor Government then rescued the Victorian Labor Government with the Commonwealth Bank taking over the State Bank of Victoria. Due to skeletons in the closet the Labor Federal Government were then forced to sell the Commonwealth Bank. Paul Keating announced the sale of CSL in 1993 (listed on ASX in 1994) ) to raise more funds for the Labor Government to reduce the deficit.

With our surplus budget now going to an expected deficit of 1 Trillion Dollars we are at risk of becoming a Banana Republic. If our coal and mineral exports collapse our dollar will collapse. If anyone thinks VA will be bailed out, lent money or any other assistance they are in fairy land. There will be more important institutions/companies requiring assistance in the coming months.

[mattyj]

News organizations shouldn’t have any discernible political beliefs..they’re there to report news, not influence it. Anything like that should be firmly labeled as editorial or opinion

[Buster Hyman]

News organizations shouldn’t have any discernible political beliefs..they’re there to report news, not influence it. Anything like that should be firmly labeled as editorial or opinion
Exactly. Stopped buying Newspapers years ago for this very reason. I will look at Fairfax news sites & then the News sites & try to figure out where the balance is. As for TV news, I watch the work experience kids on ABC News 24 for a laugh, but generally rely on SBS to avoid seeing Football matters being the lead story! (Love the Footy, but after the "news" thanks)

[morno]

And this has what to do with Virgin being broke?

[Blueskymine]

I’d hate to say it because I really really want virgin to hang around. I’ve got plenty of friends there.

However Jetstar will be Australia’s second airline if it all goes belly up (Virgin). The ACCC will mandate QF split it and that’ll be that.

Perhaps scoot or the like will jump in and pry it away under government direction.

Having said that - I think virgin will still be here. Once we are through this little hurdle, it’ll all come back with a vengeance.

[Buster Hyman]

And this has what to do with Virgin being broke?
About as much as this post.

[VH-ABC]

I’d hate to say it because I really really want virgin to hang around. I’ve got plenty of friends there.

However Jetstar will be Australia’s second airline if it all goes belly up (Virgin). The ACCC will mandate QF split it and that’ll be that.

Perhaps scoot or the like will jump in and pry it away under government direction.

Having said that - I think virgin will still be here. Once we are through this little hurdle, it’ll all come back with a vengeance.


you covered pretty much the entire board there bud!

[morno]

About as much as this post.

Of course you’d reply when I’m asking what your rant about media bias has to do with the topic at hand :rolleyes:. Keep fetching those papers grandpa

[C441]

[QUOTE=ampclamp;10743585]
He didn’t say those words exactly. It’s more how you think it was to be interpreted, in your words. It was neither confirm or denial you could draw many strings from that.
Here ya go. You can listen word for word:
ABC Radio Paul Scurrah. (https://www.abc.net.au/radio/programs/am/virgin-australia-boss-says-$1.4-billion-rescue-loan-critical/12117280)

[Buster Hyman]

Of course you’d reply when I’m asking what your rant about media bias has to do with the topic at hand :rolleyes:. Keep fetching those papers grandpa
Yet you're the one that doesn't get. Time to find a new dummy.

[Tommy Bahama]

[QUOTE=wheels_down;10743652]
Here ya go. You can listen word for word:
ABC Radio Paul Scurrah. (https://www.abc.net.au/radio/programs/am/virgin-australia-boss-says-$1.4-billion-rescue-loan-critical/12117280)

Scurrah sounds desperate. Getting the 1.4B might be one thing just wait till you have to pay it back with the Government looking at the books....now that ain't going to be pretty.

[morno]

And now Virgin announces that they’re stopping ALL domestic flights bar one return SYD-MEL.

If that’s not a company in desperation I don’t know what is.

[Icarus2001]

"Just about every government in the world is supporting their airlines..." and so is the the Australian government.

How much has the UK government lent to BA or Virgin Atlantic?

[Icarus2001]

And now Virgin announces that they’re stopping ALL domestic flights bar one return SYD-MEL on a Saturday. Err the opposite of that I believe.
Every day EXCEPT Saturday.

https://www.executivetraveller.com/news/virgin-australia-axes-all-flights-except-one-daily-sydney-melbourne

They mean RPT I guess? FIFO still operating through VARA?

[DanV2]

https://www.executivetraveller.com/news/virgin-australia-axes-all-flights-except-one-daily-sydney-melbourne

VA axes what remains of the domestic network except for a single SYD-MEL service. This leaves only the single SYD-MEL service and the charters as the operating flights in the VA network.

Are we witnessing the death knell of VAH?

[smiling monkey]

Err the opposite of that I believe.
Every day EXCEPT Saturday.

https://www.executivetraveller.com/news/virgin-australia-axes-all-flights-except-one-daily-sydney-melbourne

They mean RPT I guess? FIFO still operating through VARA?

If Virgin goes under, can VARA survive on its own or will Virgin take VARA down with it?

[34R]

VARA is Virgin

[Blueskymine]

VARA is Virgin

VARA is Skywest. Seperate AOC.

The cats arse will be back. The fokker 50s ferried back in from whoever, wherever, and they’ll roll on again. Like last time.

[34R]

VARA is Skywest. Seperate AOC.

The cats arse will be back. The fokker 50s ferried back in from whoever, wherever, and they’ll roll on again. Like last time.


Hope you're right....... What was the AOC status for VANZ and Tiger?
Genuine question

[neville_nobody]

If VARA have their own AOC there is a chance it could be resuscitated and sold off.

[machtuk]

RIP VA, the little leprechaun will be very pleased!

[DanV2]

Skywest and Hazelton/Kendall (now REX), which were all on separate AOCs from mainline AN's AOC, was sold off and restarted when AN collapsed.

VA regional is using the Skywest AOC. So it'll likely be the same case if VA was to file voluntary administration shortly, Skywest (VA Regional) would be restarted through the existing VARA AOC as soon as it's possible after administration.

[normanton]

Minus the Virgin name, so Branson who didn't come to the rescue can't make his 10%.

[-41]

a standalone VARA would be easily destroyed by AJ.

[Sunfish]

So we get left with ******* Qantas. Here comes $1000 Melbourne Sydney flights and $3000 economy to Europe. All to keep a bunch of cosseted prima donnas in Sydney. Get rid of Qantas. They are a bunch of parasites.

[Bankstown]

If VARA have their own AOC there is a chance it could be resuscitated and sold off.
The AOC is separate:
Holder Name:
VIRGIN AUSTRALIA REGIONAL AIRLINES PTY LTD
Town/City:
WELSHPOOL
State:
WA
AOC Holder Country:
Australia
Type of AOC:
Australian
CASA Office:
Western Region
Operations:
Aircraft Charter, RPT
AOC Application Status:
Issued
Issue Date:
27/09/2019
Expiry Date:
30/09/2022

[-41]

She'll be right QQ will buy the mainline 73 AOC 😂 minus the Branson baggage

[ABP]

https://www.executivetraveller.com/news/virgin-australia-axes-all-flights-except-one-daily-sydney-melbourne

VA axes what remains of the domestic network except for a single SYD-MEL service. This leaves only the single SYD-MEL service and the charters as the operating flights in the VA network.

Are we witnessing the death knell of VAH?
Qantas about to announce 1B737, 1A230 and 1DH8 operation too.

[normanton]

So we get left with ******* Qantas. Here comes $1000 Melbourne Sydney flights and $3000 economy to Europe. All to keep a bunch of cosseted prima donnas in Sydney. Get rid of Qantas. They are a bunch of parasites.
Sunfish you are a parasite yourself.

[Colonel_Klink]

And now Virgin announces that they’re stopping ALL domestic flights bar one return SYD-MEL.

If that’s not a company in desperation I don’t know what is.

You have states closing down their borders - absolutely no one is flying.

Have you been to an airport recently? I have:
Melbourne - was empty with hardly any cars driving from the Tulla up to departures or arrivals.
Sydney - we taxied for 34L (as they were only using one runway) and there wasn’t a single arrival or departure the whole time, and we were the only ones taxiing.
Gold Coast - we were the only RPT flight for the day

In case you haven’t realised, the country is in lockdown. What’s the point in flying empty aircraft around? I’m not sure what loads on QF (I would be genuinely interested to know) are like, but they are very very low on VA.

And as the poster above said, QF aren’t far from doing a similar thing. To be honest, I’m glad VA got in first with this - I would hate to know how much money is being spent flying around empty planes.

[Sunfish]

My interest is the development of the australian economy.

‘It is axiomatic that this requires Australian companies to be outward looking and internationally competitive to grow and prosper for the benefit of the Australian economy. To be clear, that term benefit means investment, international sales through competitiveness and resulting jobs and prosperity.

To achieve the above requires seamless and efficient international travel capability, inbound and outbound, from Australia.

Qantas does not provide anything like a service that supports the rest of the Australian economy.

To put that another way, your ‘30,000” jobs are at the expense of maybe 500,000++ Australian jobs because you act as a gatekeeper or parasite, preventing fast seamless access for Australian business to the rest of the world. In addition, your international services are biased towards Sydney which gives NSW a larger share of inbound investment than it warrants.

You and your management are quite capable of strangling any economic recovery post Covid - 19. Therefore it would be better for Australia to either nationalize you or let you go to the wall so that we can have true unfettered competition.

To put that another way, Qantas monopoly is a disaster for the Australian economy.

Nothing personal. You are just an economic pest.

[dr dre]

And as the poster above said, QF aren’t far from doing a similar thing. To be honest, I’m glad VA got in first with this - I would hate to know how much money is being spent flying around empty planes.

QF basically have already.

Loads are low on all airlines but there are goods and people that still need to be moved intercity by air quickly, they can’t wait for the long times that road transport takes in Australia. Freight, mail, organ transplants, compassionate travel, transfer of key critical health, emergency and government personnel. A lot of trade is now being done online and by order instead of in stores, lots of that goes by air and the current freight only fleet isn’t big enough to carry it all, there’ll need to keep some pax aircraft airborne transporting a lot of that freight so they might as well sell some tickets. There is only a skeleton network operating, but the government will need to subsidise that bare skeleton network for critical issues. It actually wouldn’t cost too much for a few months as it’d be no more than a one or a few flights per day between cities.

The airlines will also need to keep some pilots current or when the lockdowns are lifted and 5 million Australians want to travel and visit their family and friends all over the country again (in China as soon as the lockdowns were lifted people flocked everywhere) and get the economy back on track there won’t be enough current pilots to fly them all suddenly.

[cloudsurfng]

My interest is the development of the australian economy.

‘It is axiomatic that this requires Australian companies to be outward looking and internationally competitive to grow and prosper for the benefit of the Australian economy. To be clear, that term benefit means investment, international sales through competitiveness and resulting jobs and prosperity.

To achieve the above requires seamless and efficient international travel capability, inbound and outbound, from Australia.

Qantas does not provide anything like a service that supports the rest of the Australian economy.

To put that another way, your ‘30,000” jobs are at the expense of maybe 500,000++ Australian jobs because you act as a gatekeeper or parasite, preventing fast seamless access for Australian business to the rest of the world. In addition, your international services are biased towards Sydney which gives NSW a larger share of inbound investment than it warrants.

You and your management are quite capable of strangling any economic recovery post Covid - 19. Therefore it would be better for Australia to either nationalize you or let you go to the wall so that we can have true unfettered competition.

To put that another way, Qantas monopoly is a disaster for the Australian economy.

Nothing personal. You are just an economic pest.

this is a brilliant post. Long enough to print out and use as toilet paper.

[SandyPalms]

My interest is the development of the australian economy.

‘It is axiomatic that this requires Australian companies to be outward looking and internationally competitive to grow and prosper for the benefit of the Australian economy. To be clear, that term benefit means investment, international sales through competitiveness and resulting jobs and prosperity.

To achieve the above requires seamless and efficient international travel capability, inbound and outbound, from Australia.

Qantas does not provide anything like a service that supports the rest of the Australian economy.

To put that another way, your ‘30,000” jobs are at the expense of maybe 500,000++ Australian jobs because you act as a gatekeeper or parasite, preventing fast seamless access for Australian business to the rest of the world. In addition, your international services are biased towards Sydney which gives NSW a larger share of inbound investment than it warrants.

You and your management are quite capable of strangling any economic recovery post Covid - 19. Therefore it would be better for Australia to either nationalize you or let you go to the wall so that we can have true unfettered competition.

To put that another way, Qantas monopoly is a disaster for the Australian economy.

Nothing personal. You are just an economic pest.

axiomatic? Been a while mate, welcome back.

[George Glass]

Sunfish , you need help.
Where does you’re resentment come from?
Upset that the Chairmans Lounge wont recognise your petty bourgeoisie status?
Cant get an upgrade?
Meanwhile there are much bigger issues at stake. The privatisation of the CBA , Telstra and Qantas were ideologically based decisions by the Hawke Government from 1991. The quid pro quo for the average punter was low wage grow compensated by increases in the social wage. Plus the promise of a growing economy and cheaper services. And cheap airfares.
Now its coming unstuck.
We have been riding the tiger.
Nowhere else in the world would you expect to have two premium carriers and two low cost carriers at each other’s throats in a market of 25 million.
It always was delusional. Its no coincidence that Virgin dumped Tiger as soon as it could.
Governments all over the world will be re-evaluating privatisation and globalisation.
This is a once in a hundred year event.
Sorry Sunfish , howl at the moon all you like . Your day is done.

[Sunfish]

The problem George is not me, it’s the tens of thousands who won’t get real jobs because of the cost to the community of protecting Qantas.

To put that another way, we let the car industry go, we should let Qantas go for exactly the same

We can’t afford you.

[600ft-lb]

The problem George is not me, it’s the tens of thousands who won’t get real jobs because of the cost to the community of protecting Qantas.

To put that another way, we let the car industry go, we should let Qantas go for exactly the same

We can’t afford you.
10000 jobs is not worth 5 billion dollars of debt and another 1.4 billion on top of that. There is no way any private investor would pump money into a multi year loss making entity without taking ownership and the debt being forgiven so why should the taxpayer?

The simple fact is virgin is owned by foreigners, if they won't save it then it says something. Put the company into administration, do a deal on the debt and sell the operation as a going concern otherwise wind it up and start again. I'm sure someone will buy a bargain aoc with bargain planes for sale around the world to run some of the most lucrative routes in the world with skilled staff waiting to be employed. They wouldn't save Ansett.. Virgin in it's current form will go the same way unless you believe in miracles.

[itsnotthatbloodyhard]

monomania
[ mŏn′ə-mā′nē-ə, -mān′yə ]n.Pathological obsession with one idea or subject, as in paranoia.

[Blueskymine]

My interest is the development of the australian economy.

‘It is axiomatic that this requires Australian companies to be outward looking and internationally competitive to grow and prosper for the benefit of the Australian economy. To be clear, that term benefit means investment, international sales through competitiveness and resulting jobs and prosperity.

To achieve the above requires seamless and efficient international travel capability, inbound and outbound, from Australia.

Qantas does not provide anything like a service that supports the rest of the Australian economy.

To put that another way, your ‘30,000” jobs are at the expense of maybe 500,000++ Australian jobs because you act as a gatekeeper or parasite, preventing fast seamless access for Australian business to the rest of the world. In addition, your international services are biased towards Sydney which gives NSW a larger share of inbound investment than it warrants.

You and your management are quite capable of strangling any economic recovery post Covid - 19. Therefore it would be better for Australia to either nationalize you or let you go to the wall so that we can have true unfettered competition.

To put that another way, Qantas monopoly is a disaster for the Australian economy.

Nothing personal. You are just an economic pest.

Sunfish, Qantas didn’t kill ansett. Ansett did a pretty good job of it itself. With the help of our friends across the ditch. And probably your touch managing some of its engineering. How’d your 767 oversight go again? Oh yes that’s right. What a ‘cracker’ of a tale.

Qantas has also focussed itself on your beloved Melbourne via Jetstar. That’s it’s hub and head office. And it serves your demographic down there very well.

Qantas is a Sydney based airline and obviously focuses its head office operation there. Basically because Sydney is Australia’s biggest city, and where it’s been for most of its history. Longer than you’ve been alive. It’s also the place most visitors want to fly into before dispersing across the domestic network.

Qantas is also flying around empty planes burning cash to serve as an essential service. Because it’s what it does as Australia’s national airline for 100 years. The competition doesn’t want to burn its cash for the good of Australia. Because it’s cash is better suited to its shareholders country of origins. And to keep it going for a little longer. Which is fair enough. PS is actually doing a great job. Perhaps if the cards were a little different, I’ve no doubt Virgin would have come good on his watch. It still may.

To put it another way, would qantas sell the silverware to keep 3k going? It’ll punt it in a heartbeat.

So love it, hate it, whatever. I don’t care. But it’ll be here in another 100. Because it’s an Australian company that does what it does pretty well.

[George Glass]

“Real jobs” ?????

Do you actually know anybody who has worked the industry?
Or do you just make it up in your head?
There has been a relentless chase to the bottom across the industry , including Qantas, for the last 30 years.
The people suffering the most right now will be either on casual contracts or EBAs with bare bones sick leave or personal leave entitlements.
Talk to a Tiger pilot . See how you go . Just don’t use the phrase “real jobs”. You might not survive the encounter.

There has been a hollowing out of the middle class and an abandonment of the working class for 30 years.
Now is the reckoning.
The challenge for capitalism is to prove that Marx wasn’t right after all.
He would have had you peg straight away Sunfish.

[Icarus2001]

I'm sure someone will buy a bargain aoc with bargain planes for sale around the world How many times....? You cannot buy an AOC, you must buy the company that owns the AOC, which then means you take on all of that companies' liabilities as well.

[600ft-lb]

How many times....? You cannot buy an AOC, you must buy the company than owns the AOC, which then means you take on all of that companies' liabilities as well.

As I said, let it go into administration, a savvy investor could buy a fully functional airline for a decent price and the debtors could get cents on the dollar instead of nothing. There is options, its not like we have to see the end of the Virgin brand in Australia. I believe another charter operation which is quite successful in Australian skies started out the exact same way..

Expecting any organisation to succeed in a post covid world with $5 billion in debt that hasn't turned a profit in 7 or 8 years when the rest of the aviation world has been literally printing money is pure fantasy.

[krismiler]

However Jetstar will be Australia’s second airline if it all goes belly up (Virgin). The ACCC will mandate QF split it and that’ll be that.

That's a real possibility if Virgin go under and no one steps into the gap. In exchange for being the only premium airline QF might be happy to be rid of it and concentrate on the full service market with the higher yielding pax which is what they know. Jetstar don't really fit into the QF/EK/Oneworld mafia anyway.

Consolidation will be the name of the airline game in the post COVID-19 world and whilst Singapore Airlines are likely to come through because of strong government backing, their traditional premium and business traveller market will be decimated. Picking up an established Australian low cost operation at a depressed price and merging Jetstar Asia into Scoot would give them a strong showing in the Asia Pacific low cost arena which is likely to be the only growth area for a long time. Singapore lacks a domestic network which its rivals enjoy, this ultimately caps Scoot at around 50 airframes. A combined Scoot+Jetstar+Jetstar Asia fleet would be around 140 aircraft and quite capable of taking on the currently much larger Air Asia and Cebu Pacific competitors. Call the whole thing Scoot and effectively Australia would be Singapore's domestic backyard.

Buying an established operation, which already complies with Australian rules, operates the same types as your subsidiary and isn't encumbered with billions of dollars of debt like Virgin makes more sense than a new start up like Tiger Australia did. There is already considerable Singaporean investment in Australia, and with QF and SIA being major rivals, the ACCC should be satisfied that competition would be maintained. Sometimes strange partnerships emerge such as SIA, Virgin, Etihad and Air New Zealand.

The above scenario may seem a little imaginative but isn't outside the realms of possibility in the interesting times that we are currently in.

[wheels_down]

More likely Qantas would spin JQ off. I don’t know why it has not been done already, but even if Virgin remains which is more likely, there is a very high chance that JQ is going to be spun off in some form. Financially they will need it, would be a big cash grab to assist funding upcoming Airbus orders and market downturn. A minor to medium share would remain, I can’t really see them disposing of it all together.

Doing this post a Virgin collapse, well the value would soar even more and would be a very attractive offer.

A Jetstar Asia and Scoot merger would make sense. The only issue would be the asking price for it. Jetstar Asia lease the whole fleet and is loss making, overlap many routes with Scooter so effectively the business is worth $0. They are facing the future prospect of going up against Scoot with a Fleet six times. That is only a few years away. Just piss it off.

[cloudsurfng]

The problem George is not me, it’s the tens of thousands who won’t get real jobs because of the cost to the community of protecting Qantas.

To put that another way, we let the car industry go, we should let Qantas go for exactly the same

We can’t afford you.

but you keep telling everyone you can afford everything.

[DanV2]

That's a real possibility if Virgin go under and no one steps into the gap. In exchange for being the only premium airline QF might be happy to be rid of it and concentrate on the full service market with the higher yielding pax which is what they know. Jetstar don't really fit into the QF/EK/Oneworld mafia anyway.

Consolidation will be the name of the airline game in the post COVID-19 world and whilst Singapore Airlines are likely to come through because of strong government backing, their traditional premium and business traveller market will be decimated. Picking up an established Australian low cost operation at a depressed price and merging Jetstar Asia into Scoot would give them a strong showing in the Asia Pacific low cost arena which is likely to be the only growth area for a long time. Singapore lacks a domestic network which its rivals enjoy, this ultimately caps Scoot at around 50 airframes. A combined Scoot+Jetstar+Jetstar Asia fleet would be around 140 aircraft and quite capable of taking on the currently much larger Air Asia and Cebu Pacific competitors. Call the whole thing Scoot and effectively Australia would be Singapore's domestic backyard.

Buying an established operation, which already complies with Australian rules, operates the same types as your subsidiary and isn't encumbered with billions of dollars of debt like Virgin makes more sense than a new start up like Tiger Australia did. There is already considerable Singaporean investment in Australia, and with QF and SIA being major rivals, the ACCC should be satisfied that competition would be maintained. Sometimes strange partnerships emerge such as SIA, Virgin, Etihad and Air New Zealand.

The above scenario may seem a little imaginative but isn't outside the realms of possibility in the interesting times that we are currently in.

While an interesting scenario, let's keep in mind that SIA has a dismal record at operating in Australia overall through equity.

Strike 1: Air New Zealand group (including Ansett). 25% stake in NZ after then-Chairman & MD Selwyn 'Borghetti' Cushing used his veto rights to block SQ from buying News Corp's 50% stake in AN. SIA's stake in NZ ended during the Ansett bankruptcy debacle

Strike 2: Tiger Airways Australia. Even with SIA owning that former subsidiary through Tiger Airways Holdings, they still managed to screw that up with the maintenance debacles, "selling to VA for $1" to save face on their own incompetence.

Strike 3: Virgin Australia. Participating in the Capacity War & CapEx failures in cahoots with Etihad and Borghetti. Air New Zealand also played a minor role through participating in the Capacity War before then-CEO Luxon realised the situation, tried to change the situation but was outnumbered by EY and SQ, and subsequently decided to sell out of VA while NZ had the chance.

If SIA couldn't get their 3 goes in Australia right, there's very little chance of SIA getting a "4th go" right.

[krismiler]

The Qantas Pan Asian strategy doesn't seem to have worked too well either, and Jetstar Pacific (Vietnam) would probably be up for the chop if Jetstar Asia goes. Ten aircraft up against the likes of Vietjet Air and Bamboo Airways wouldn't be a serious proposition, especially without access to a wider network. Tiger Airways tried expansion in Indonesia, Taiwan, Philippines and Australia without success. Going up against large, well established local airlines on their home turf with a considerably smaller fleet and hoping to gradually build up hasn't worked for foreign airlines.

AirAsia (Malaysia) and Cebu Pacific have grown strongly from a small size, but they were operating in their home countries and their only competition was an inefficient and expensive national airline which they could easily undercut with the proven low cost business model. They got in at the right time and filled the gap.

Jetstar Hong Kong never got off the ground, QF are a minority shareholder in Jetstar Japan and could decide to sell out to Japan Airlines and leave it to them to run as their own rebranded low cost subsidiary.

Singapore Incorporated won't step in to prop up a loss making, billions in debt with profits years away, Virgin Australia in its present form. Keeping the SIA group going is already a big drain on government resources.

Stemming losses and making consolodations will be the new order, profits will be difficult enough, even without capacity and price wars.

QF would probably be happy with its 65% line in the sand domestic share together with the regional and international network. They are one of the few airlines that we can be reasonably sure will still be standing at the end of the current pandemic. News reports have now stopped referring to a recession and are talking about a depression instead.

The question is who will fill the remaining 35% of the domestic market. A Virgin mark 2 with 40 B737s or a Lion Air Australia operation with similar numbers would enable QF to retain JQ though they would probably restructure it into a smaller size without the B787s and Asian subsidiaries.

Virgin going under without a replacement to fill the gap could require QF to divest itself of Jetstar. A spun off JQ with 35% market share and no competition within that sector would be a more attractive proposition for investors than bailing out Virgin and having to compete with QF at the top and JQ at the bottom.

There could be an unspoken, cosy arrangement where QF set fares which maintain profitability and shareholder return for them, the competing set up are about 15% less ie not enough to make QF customers trade down but too much to make the bogans trade up. Occassional snap sales of a few seats at 50% off by both airlines and you have the impression of competition which keeps everyone happy. Passengers pay higher fares but services are maintained and both operators make money.

[wheels_down]

Well it’s another reason why Alan wants Virgin out. Effectively would double Jetstar’s value.

Jetstar total group EBIT is around 350-400m. This contains all the loss making ventures of Pacific, Vietnam, Japan, so this could be anywhere up to 100m in loss, capex.

Offloading 50% would be a multi billion dollar deal. Offloading half without Virgin, would be eye watering.

To please regulators, and selling say 75%, well you can see why Alan wants Virgin gone. Would give the parent business enormous firepower for the next few decades. Netting many billions from a sale will put off any competitor even contemplating arriving down under. It would become the worlds strongest carrier, debt free, high margins, and full control of the majority of slots, property.

Much work would be done around securing as many East Coast Virgin slots and terminals as possible, to enable any other entrant an impossible task of building a network. The entire WA charter operation would be picked up almost the next day.

I would expect QF to ramp up the noise around Virgins funding as time goes along. If QF promises to replace every Aircraft that Virgin had in the market, like for like, with a large chunk of tech, cabin, engineering crew, well that could pose problems for any Virgin funding attempt.

[Turnleft080]

I want to say this because it's been building inside me. If I had a flame thrower I burn this whole F@#*ing web site down to the ground.
You play with people's minds, people's livelihoods, nothing but disrespect. It's bullying. I'll stop now before I get really depressed.

[Led Zeppelin]

Much work would be done around securing as many East Coast Virgin slots and terminals as possible......

You can bet that these very scenarios have already been examined in microscopic detail by Qantas in case of VAH ceasing operations.

As much it is unlikely, it's in everyone's interest if VAH, or a version of it, keeps operating domestically.

Keep the bastards honest.

[ampclamp]

I want to say this because it's been building inside me. If I had a flame thrower I burn this whole F@#*ing web site down to the ground.
You play with people's minds, people's livelihoods, nothing but disrespect. It's bullying. I'll stop now before I get really depressed.

Please, stop reading it for your own good. I've been down the same path with Ansett. It's horrible I know.

It's all speculation and posturing here. Nobody is playing with livelihoods here as the decisions that matter are being made elsewhere, so best tune out. There is no useful info here as far as your career is concerned.

[neville_nobody]

Jetstar total group EBIT is around 350-400m. This contains all the loss making ventures of Pacific, Vietnam, Japan, so this could be anywhere up to 100m in loss, capex.

Offloading 50% would be a multi billion dollar deal. Offloading half without Virgin, would be eye watering.


Assuming that is technically possible. Jetstar is very opaque in its structure and operation. Noone knows what the real figures are and how it benefits QF. It is possible that it cannot be separated or QF may not want it to be separated for a myriad of reasons.

[Colonel_Klink]

Well it’s another reason why Alan wants Virgin out. Effectively would double Jetstar’s value.

Jetstar total group EBIT is around 350-400m. This contains all the loss making ventures of Pacific, Vietnam, Japan, so this could be anywhere up to 100m in loss, capex.

Offloading 50% would be a multi billion dollar deal. Offloading half without Virgin, would be eye watering.

To please regulators, and selling say 75%, well you can see why Alan wants Virgin gone. Would give the parent business enormous firepower for the next few decades. Netting many billions from a sale will put off any competitor even contemplating arriving down under. It would become the worlds strongest carrier, debt free, high margins, and full control of the majority of slots, property.

Much work would be done around securing as many East Coast Virgin slots and terminals as possible, to enable any other entrant an impossible task of building a network. The entire WA charter operation would be picked up almost the next day.

I would expect QF to ramp up the noise around Virgins funding as time goes along. If QF promises to replace every Aircraft that Virgin had in the market, like for like, with a large chunk of tech, cabin, engineering crew, well that could pose problems for any Virgin funding attempt.

Isn’t this the whole reason people are arguing for the government not to let VA fail....?

[TBM-Legend]

Isn’t this the whole reason people are arguing for the government not to let VA fail....?


The Federal Govt is not bailing VA. I know from an internal source that they a. don't see any of the current owners ponying up with any support and b. they are afraid that any cash splash will wind up in the hands of the shareholders and other preferential creditors leaving the cupboard bare again. The VA accumulated losses are massive and no one will go anywhere near them.

[Buster Hyman]

I still can't see QF agreeing to the setting up of a LCC (JQ) to compete against them. However, it would be interesting if they were made to revert to QF as an INTL airline only & JQ as a DOM airline only...back to how it was. Of course, I can't see this happening either, but it would make it easier for a new entrant into the market.

[Riding the Goat]

https://7news.com.au/politics/virgin-gives-annual-leave-back-to-workers-c-967464

At least it looks like Virgin is looking after its employees and taking a more conservative stance on how to use the Jobkeeper payments and Annual Leave.

I wonder if Qantas and Jetstar will follow suit?

[TACQANAVIAVEC]

The problem George is not me, it’s the tens of thousands who won’t get real jobs because of the cost to the community of protecting Qantas.

To put that another way, we let the car industry go, we should let Qantas go for exactly the same

We can’t afford you.

Huge difference mate, car industry didn't make money, QF does and as of now has the ability to survive this crisis unaided, something very few airlines around the world can claim.

It seems that in your altruistic world sending QF and their decently paid 30,000 workforce down the tube would unleash the aviation Kraken, bringing in thousands of million of billions of lower paying jobs from exceptional airlines such as Lion or Scoot so that towns such as Coober Pedy can be served by a daily double return B787 service to La Palma International. Where do I sign up?

[Icarus2001]

At least it looks like Virgin is looking after its employees Well really the taxpayer is looking after them. By the taxpayer (via the govt) paying wages to staff that allows them to gain their annual leave credits back. This will cost VA nothing.

Did you forget about the ~220 Tiger pilots that "Virgin is looking after."?

[krismiler]

The car industry wasn't an essential strategic asset, vital to the national well being. Cars can easily be imported from multiple sources at a lower price, and dare I say it, better quality than they could be produced in Australia. Whilst it did provide jobs directly and also throughout the supply chain, the cost of maintaining those jobs was prohibitive. Given the limited local market and high cost of production the industry would always require support, and whilst everyone wanted Holden to be saved, few people actually went out and bought their cars. Ford Australia and Holden weren't going to become major exporters similar to Toyota and Hyundai so their prospects were very limited.

Qantas on the other hand is a strategic asset, particularly on the domestic side and can compete well with foreign airlines on the international side. It was previously profitable and will likely generate future profits once we are over the current situation. It may not even require a bail out if relative normality returns soon. Government resources will be stretched extremely thin in the coming months, if any aid is given to Virgin at all it will be very limited and conditional on the airline showing it can turn around in a fairly short time, which will require major restructuring and downsizing. Anyone who thinks Canberra will simply write a cheque which enables Virgin to continue in its present form is dreaming.

[Icarus2001]

Anyone who thinks Canberra will simply write a cheque which enables Virgin to continue in its present form is dreaming.

Perhaps that should be the last post in the thread until there is a further development? Difficult to argue with anything that you wrote.

[V1virgin]

Well really the taxpayer is looking after them. By the taxpayer (via the govt) paying wages to staff that allows them to gain their annual leave credits back. This will cost VA nothing. QF is using the money to paydown annual leave - using taxpayer money to clean up their balance sheet. I thought they were against government handouts?

[Compylot]

One thing is for certain and that is that the Australian Government or any potential investor won't make may decision until they've made careful analysis of the expert opinions written down by the pilots on pprune.

I have heard this from an internal source.

[Led Zeppelin]

Yes, a separate confidential source has also indicated a government decision will be influenced by the sage comments within these forums.

So now we have multiple points of confirmation - facts always win out. :uhoh:

[TBM-Legend]

ampclamp. Whilst being interviewed on ABC breakfast radio Paul Scurrah effectively said 90% of the shareholders in VA indicated there were no funds available for VA. He went on to say VA were attempting to raise from other sources. In my opinion the only option would be to sell owned assets such as aircraft. If the assets were required in the future it could be a sale and leaseback. As there is uncertainty re the future of VA the lease rates would be prohibitive on a sale and leaseback arrangement.


Virgin don't have any unencumbered aircraft or other assets...they even have had E190's and ATR's parked in US and NZ for a year or two unable to get out of those leases. Big bucks per month for aircraft earning nothing..

[Paragraph377]

Virgin don't have any unencumbered aircraft or other assets...they even have had E190's and ATR's parked in US and NZ for a year or two unable to get out of those leases. Big bucks per month for aircraft earning nothing..
A decision that is still negatively impacting VA. What a great Board, they should be so proud of their decisions in recent years! And to think these wankers are still drawing a wage....

[DanV2]

Virgin don't have any unencumbered aircraft or other assets...they even have had E190's and ATR's parked in US and NZ for a year or two unable to get out of those leases. Big bucks per month for aircraft earning nothing..

VA directly owns half their 737 fleet.

4 of their 777Ws are also registered under "Virgin Blue (VB) Leaseco Pty Ltd" (a wholly owned subsidiary of VAH).

https://www.planespotters.net/airline/Virgin-Australia

[SPEEDI]

QF is using the money to paydown annual leave - using taxpayer money to clean up their balance sheet. I thought they were against government handouts?

Pretty sure I read in the FAQ, QF weren’t doing this.

[Vindiesel]

From The Australian today: "Mr Godfrey said the airline had lost its cost advantage over the Qantas Group and any private or public investment should be contingent on Virgin Australia chief executive Paul Scrurrah forcing through a massive restructure to make the carrier viable in the long term."
What (if any) steps is the VAH CEO taking to significantly lower the cost base long term? Have the unions been approached about wage reductions or, at the very least, significant wage freezes to help make it more viable over the next 5-10 years?

[Toruk Macto]

If the owners of VA wanted to gift the ownership of their airline to someone who would take it ?

[crosscutter]

JB, in haste to transform Virgin into a QF competitor, signed too many bad supplier contracts which contributed more to loss of cost advantage than the salaries paid to the staff.

[Arctaurus]

Can't see any government investment - One of Scurrah's remaining options would be to position Virgin back to it's roots as a true loco with a single aircraft type only (B737) with a reduced fleet size. Get rid of VARA which has probably got some value in the west.

The problem is no private investor has come forward to date, the stakeholders are clearly not interested, so it's a matter of trying to reduce outgoings to the point where there is enough cash going forward beyond COVID. That's a very tricky exercise as the timing of the end of COVID restrictions is unknown, plus the recovery time back to a more "normal" market could take years.

[DanV2]

Can't see any government investment - One of Scurrah's remaining options would be to position Virgin back to it's roots as a true loco with a single aircraft type only (B737) with a reduced fleet size. Get rid of VARA which has probably got some value in the west.

The problem is no private investor has come forward to date, the stakeholders are clearly not interested, so it's a matter of trying to reduce outgoings to the point where there is enough cash going forward beyond COVID. That's a very tricky exercise as the timing of the end of COVID restrictions is unknown, plus the recovery time back to a more "normal" market could take years.

Reverting back to the LCC option using the owned 737 fleet is probably the more ideal option, via filing Voluntary Administration by calling in the administrators and relieving the shareholders of their requirements.

While the 'shareholders' may not be happy for 'losing control' of VA through administrators being called in, it may be better for VA (or a post-administration successor, whatever they call the post-administration airline, in the long run).

For SIA, Etihad, HNA, et al. If I were any of that lot, I'd be ensuring that VA wasn't trading while 'insolvent', as they'd be in trouble otherwise if they were (and face possible bans from managing a company in Australia if they were to invest in any Australian based company in the future).

If VA were found to be trading while 'insolvent', it'll add to the numerous Australian failures for the "so-called messiah" SIA (and would be a big setback for SQ 'trying to tap' into the Australian domestic market). SIA already has a trail of investment failures in Australia through Air New Zealand/Ansett and Tiger Airways Australia.

[davidclarke]

Reverting back to the LCC option using the owned 737 fleet is probably the more ideal option, via filing Voluntary Administration by calling in the administrators and relieving the shareholders of their requirements.

While the 'shareholders' may not be happy for 'losing control' of VA through administrators being called in, it may be better for VA (or a post-administration successor, whatever they call the post-administration airline, in the long run).

The problem being all the owned aircraft would be encumbered and likely repressed by creditors.

[Paragraph377]

From The Australian today: "Mr Godfrey said the airline had lost its cost advantage over the Qantas Group and any private or public investment should be contingent on Virgin Australia chief executive Paul Scrurrah forcing through a massive restructure to make the carrier viable in the long term."
What (if any) steps is the VAH CEO taking to significantly lower the cost base long term? Have the unions been approached about wage reductions or, at the very least, significant wage freezes to help make it more viable over the next 5-10 years?
The bald one comes out from his nature reserve in Tasmania to speak!! BG got the push once the airline starting to really grow. Much too big for his limited abilities. Brett’s legacy is floating a lemon of an investment so that Richard, Brett, Sherrard and Brett’s other high school buddies would receive millions of dollars worth of shares. Pay dirt! And benefit they did. The share price went downhill from the time they floated though. What did you do Brett in the years after the airline floated, to keep investors happy and to grow the share price? Yep, nothing. From memory Richard’s take was around $960m, Sherrard bailed early with around $60m to $80m, Godfrey around the $40m and a few other ‘mates’ took around $5m to $7m. Give or take a few million here and there. Along came Il Deuce and the race to the bottom hit hyper speed. I wouldn’t put any thought into or pay attention to anything current of former executives or Board say.

Brett, go back to your eco lodge and comfortable lifestyle c/o the original Virgin Blue float. The days of dancing around the tarmac and waving goodbye to planes are long gone, and so are you. Or are you camping this long weekend on Makepoo’s Island, the Island bought exclusively (supposedly) for staff to use? Another Virgin deception.

[coaldemon]

Whether you like him or not BG has actually hit it on the head. No point funding an entity that can't actually recognise it has costed itself out of the market. This is what Chapter 11 in the US is about. If you can't prove that you will be able to restructure you don't get all the protections and benefits.

[The Bullwinkle]

No point funding an entity that can't actually recognise it has costed itself out of the market.
But the moron who did all of that has now gone.
Paul Scurrah (along with Blind Freddy) is acutely aware of how the costs were blown out and he was actively rectifying the situation.
He was making reasonable progress of undoing a decade of mismanagement when this Coronavirus came along.
If there had not been COVID-19, Virgin was definitely on the path to profitability.

[markontop]

IRONY
How the nationally of the 40% owners are the same one’s responsible for the pandemic leading to VAH tenuous position.

[normanton]

If there had not been COVID-19, Virgin was definitely on the path to profitability.
Funny, I've heard that countless times over the past decade.

Forgive me, but I don't want my tax payer dollars spent on a whim of a gamble.

[spektrum]

This is what the ABC is teaching young Australians. Money printing is fine so lets bail everyone out.

https://www.abc.net.au/triplej/programs/hack/coronavirus-covid19-how-australia-is-paying-for-welfare/12133292

[777Nine]

But the moron who did all of that has now gone.
Paul Scurrah (along with Blind Freddy) is acutely aware of how the costs were blown out and he was actively rectifying the situation.
He was making reasonable progress of undoing a decade of mismanagement when this Coronavirus came along.
If there had not been COVID-19, Virgin was definitely on the path to profitability.

They left it too long and all it was going to take was something like this to push them to go under. Not his fault as the investors have to be held accountable here along with the previous management.

I don't feel that it's right to use taxpayer's money when the investors can easily stump up $1.4billion. Shared between them it's like $350million each.

[Dale Hardale]

One of the factors in a continue or fold scenario is the staff entitlements and how much erosion and loss of these entitlements occurs as time goes on and cash is burnt in fixed overheads.

The company is essentially at close to zero operating income, so I would imagine there is some serious soul searching going on at Virgin, to get to the most appropriate outcome for everyone.

[The Bullwinkle]

Weekend Australian article by Steve Creedy



Troubled Virgin reduced to a wing and industry prayersDark memories of the 2001 Ansett collapse are stalking the Australian aviation industry again as debate rages over the future of Virgin Australia.They hark back to a traumatic time that led to the loss of 15,000 direct jobs, suicides by former workers, shattered careers, broken companies and higher full-service fares for corporate customers.

It resulted in a $10 ticket tax that raised more than $250m for employee entitlements and resulted in Qantas becoming the 400lb gorilla of Australian aviation.

Questions again are being asked about whether we want to repeat that trauma or see the government step in to ensure that a vital Australian industry remains competitive.

Virgin chief executive Paul Scurrah was managing 550 people at Ansett when the end came in what he describes as one of the most distressing periods of his career.

He recalls seeing families where two or three generations lost their income and economic carnage among businesses that relied on the airline.

Scurrah tells The Weekend Australian this is partly why he has been working tirelessly to avoid a repeat of the “long-lasting” pain of the Ansett collapse.

“A huge amount of businesses went broke but the thing that sticks in my mind most about it is the mental health cost,’’ he says.

“There were many much-loved people who couldn’t see beyond the crisis for whatever reason and that was the most distressing part of the whole exercise.”

Virgin has appealed to the federal government for an urgent “statement of confidence” and $1.4bn in assistance but has yet to receive a response. Analysts are predicting the airline could run out of money within as little as three months.

The dire nature of the situation was underscored on Friday when Virgin cut its already reduced flying schedule to a daily service between Melbourne and Sydney because of the enormous fall in demand.

It continues to fly repatriation flights and some charter services in areas such as the resources sector, but for all intents and purposes it has gone into hibernation after previously standing down 8000 people and announcing it would make 1000 redundant.

It looks grim — it is grim — but it is not Ansett.

The factors behind Ansett’s downfall were many and complex but the trigger was a decision by Air New Zealand to exercise its pre-emptive rights on a half share owned by News Ltd.

A deal had been done for the stake to be taken over by deep-pocketed Singapore Airlines, with the proviso that then Ansett chief executive Rod Eddington stay at the helm.

Air New Zealand was unprepared for the problems at the Australian carrier or to take on the aggressively competitive Qantas, which also had lobbied against Singapore’s involvement.

The move almost killed the Kiwi carrier — the New Zealand government had to step in to save it — and it left a cast-off, debt-laden and gutted Ansett mortally wounded.

Virgin Australia was a long way from the poster boy category of Qantas when it came to pre-COVID-19 profitability, but it was nowhere near the miserable final state of Ansett.

Like other airlines globally, however, it has been devastated by government restrictions, passenger fears and a colossal slump in demand.

“Ansett was a dead dog and Virgin isn’t really,” says CAPA Centre for Aviation chairman emeritus Peter Harbison. “These circumstances are just totally different.”

Qantas has been lobbying hard against Virgin receiving any special assistance, arguing it should be given $4.2bn if Virgin receives $1.4bn, but Harbison argues that the government should be looking not at fairness to Qantas but what is in the public interest.

The latest estimate of Virgin’s economic contribution to Australia is about $11bn but the airline says the loss would amount to $30bn if it were to disappear because of the flow-on impact to jobs, infrastructure and suppliers.

Harbison views the circumstances on the other side of the pandemic as unknown and “potentially worse than most people are contemplating”.

He believes the government faces a choice of letting Virgin collapse or keeping it alive and having “at least the seeds of a competitive environment”.

He is also doubtful that another airline will be rushing to fill the vacuum if Virgin falls over.

“You have Qantas, which is the most powerful domestic airline of any in the world in terms of market coverage and really seriously good management,’’ he says. “What airline in their right minds is going to start up against them?”

There is also another key difference when it comes to the situation with Ansett, according to Virgin founder and former chief executive Brett Godfrey.

He notes that at the time of Ansett’s collapse, there were already two other more efficient airlines operating in Australia — the Qantas Group and the small but disruptive Virgin Blue.

“If you take a step back and look at the differences, they were that you had an airline (Virgin Blue) that had nine aeroplanes in the market at that time and a trajectory that showed it had great potential to fill the void,’’ he says. “And so they were able to step into the breach.

“It’s different this time because you don’t have an indispensable second competitor in the wings.”

Godfrey echoes Harbison’s doubts about a new entrant, arguing: “If Virgin falls over, we end up with a lottery. Given every airline in the world today is hibernating, those that survive to fly ‘tomorrow’ will have their hands full recommencing in their home markets, let alone launching new brands in Australia.”

One similarity with 2001 is Qantas is likely to have excess international aircraft it can deploy in the domestic market to fill some of the void left by a Virgin collapse. The expectation is that domestic travel will take off before international.

Qantas and others have been vocal in arguing that Virgin’s existing shareholders — Etihad Airways, Singapore Airlines, Nanshan group and HNA — should stump up the cash to help Virgin, but there is little faith this will happen.

These are companies embroiled in their own crises and even Singapore Airlines’ long-harboured desire for a foothold in the Australian domestic market is taking a back seat to survival, despite the $US19bn ($21bn) the company is adding to its war chest with the help of its state-owned major investor.

Others believe the government should give foreign carriers the ability to carry passengers on some Australian domestic routes if Virgin fails. But none of the industry figures contacted by The Weekend Australian say they think this system, known as cabotage, is a good idea.

“Cabotage is an interesting theory but it never works in practice,’’ says one former airline chief executive, pointing to the desire by most passengers to take direct flights and the extra expense to airlines of flying just one stop. “It has never worked anywhere because you never get the amount of capacity you need.”

If it turns out that there is another airline willing to jump into the Australian domestic market to replace Virgin, it still would face a plethora of regulatory requirements and the need to sew up commercial agreements on issues such as slots and gates before it can start.

It took Virgin three years of preparation to get its first two planes in the air in 2000 and the Civil Aviation Safety Authority says it takes about 12 months to issue an air operators certificate, depending on the quality of the application.

Nor is rapid growth a given: Virgin’s growth was constrained to a rate of about one aircraft a month — two in some months — as it trained cabin and flight crew and met various regulatory hurdles

Scurrah observes it took 10 years to get Virgin to the point where it had 30 per cent market share and that people overlook the fact it is incredibly difficult to start an airline from scratch, particularly against a powerful competitor such as Qantas.

“It has taken us 20 years to do it. What we would say is that beyond this, if there’s not a robust and competitive two-airline industry on the other side of this crisis, you start the clock again at day one,” he says.

Steve Creedy is a former aviation editor at The Australian who has covered the sector for 25 years.

[Lookleft]

Why would you start an airline from scratch when there are airlines such as Rex who could conceivably apply for a HCAOC and operate jets with at least a 30% market share beckoning. Its interesting that the article talks about how long it took Virgin to get an AOC. Impulse actually got their HCAOC before Virgin so it can be done.

[Denied Justice]

I wonder if Alliance have got more than a passing interest in a move to a larger domestic operation ?

[Paragraph377]

I wonder if Alliance have got more than a passing interest in a move to a larger domestic operation ?
They certainly have a company structure in place, AOC, COA and accountable people. But they don’t have all the infrastructure that they need, not yet anyway. Big task and they would become an entirely new airline so to speak. Be fun to watch Scott and his battles with CASA on a larger scale. Aircraft on the NZ register, if permissible, would also be interesting. It cuts a measure of CASA out of the loop. Not completely, but partially. CAA are a better regulatory body than Carmody’s CASA clowns any day of the week. Perhaps Scomo could then trip back in CASA staff numbers finally?

There is an old saying; ‘from change comes opportunity’. I have no doubt that there will be some businesses and people out there who will eventually thrive and profit out of the current situation.

[Buster Hyman]

It resulted in a $10 ticket tax that raised more than $250m for employee entitlements
When they get the basics wrong, one can safely assume the rest of it is garbage as well.

[Oakape]

It resulted in a $10 ticket tax that raised more than $250m for employee entitlements

If I recall correctly, not one cent of the ticket tax went to staff entitlements. It was designed to be a guarantee of staff entitlements. Asset sales managed to cover the bulk of the entitlements (90 + %) & the take from the ticket tax went into general revenue. Something the government was very quiet about!

[thec172man]

However Jetstar will be Australia’s second airline if it all goes belly up (Virgin). The ACCC will mandate QF split it and that’ll be that.


I have heard this line a few times, but come on, is it the ACCC's role to create competition?

The ACCC mandate is to "protect consumer rights, business rights and obligations, perform industry regulation and price monitoring and prevent illegal anti-competitive behaviour". It is not there to make sure every business has a competition, otherwise Australia would be one of the worst places to do business, could you imagine every time a competitor goes under, ACCC forcibly breaks up the remaining companies in the same sector all in the name of "competition'?

As for monopolies, well if there is a market for 2 players, there would be someone else who steps up, for all the sentiments that no one would step in the shoes of VA if they go under, maybe that just means that after this crisis, there isn't enough market for more than 1 player?

[airdualbleedfault]

Forgive me, but I don't want my tax payer dollars spent on a whim of a gamble.
But you'd be happy with your "taxpayer dollars" going to 10000 centrelink cheques a fortnight? Let me take a wild guess here, you're employed somewhere in the QF group?

[Paragraph377]

One of the ‘unseen’ issues with financial bailouts is that you are kicking the can further down the road. For Australia it is hundreds of billions of dollars that the Government is providing, and a lot of it is going to poorly run businesses that have failed to risk assess and plan or invest in measures that would potentially see them through times of turmoil. Virgin, sadly, is a classic example of this. Bailouts are nothing but destructive. They reward poor planing. They leave valuable assets with those who are managing them poorly, making us all poorer. Contrary to popular belief, money does not grow on trees.

When this is over the Reaper will come to collect. COVID-19 stimulus packages, money printing, collecting part of your superannuation early, extra welfare payments, wages covered by stimulus money - over $200b to date and people think that will all be forgotten?? The Reaper will ask for it all back, and with interest through a rise in GST, a rise in Government fees and charges, and that chestnut called ‘levies’. This will occur at Federal, State and Local Government levels. They will charge us for the air that we breathe and for defecating by the kilogram. The middle class was already shrinking, now it is effectively gone overnight. Now who is going to pay for the tax cuts for the rich and pay the unemployment benefits for the poor?? The pain has only just begun.....

[crosscutter]

Centrelink are going to have to write 10000 cheques a fortnight regardless. The real question is how should they be distributed?

[VH DSJ]

When this is over the Reaper will come to collect. COVID-19 stimulus packages, money printing, collecting part of your superannuation early, extra welfare payments, wages covered by stimulus money - over $200b to date and people think that will all be forgotten?? The Reaper will ask for it all back, and with interest through a rise in GST, a rise in Government fees and charges, and that chestnut called ‘levies’. This will occur at Federal, State and Local Government levels. They will charge us for the air that we breathe and for defecating by the kilogram. The middle class was already shrinking, now it is effectively gone overnight. Now who is going to pay for the tax cuts for the rich and pay the unemployment benefits for the poor?? The pain has only just begun.....

There's your answer. Print more money! LOL. Why do they even bother to tax us when the government can print more money at will?

[TACQANAVIAVEC]

But you'd be happy with your "taxpayer dollars" going to 10000 centrelink cheques a fortnight? Let me take a wild guess here, you're employed somewhere in the QF group?

When you consider both airlines would have to return as smaller versions of themselves then every dollar spend on keeping the loss making carrier alive is not only at the expense of the tax payers but also at those at the bottom of the queue at QF. So you bet any QF employee staring at their jobs been made redundant by unfair use of tax payers money would have very strong feeling about this, nothing personal just being fair.

[Icarus2001]

As for monopolies, well if there is a market for 2 players, there would be someone else who steps up, for all the sentiments that no one would step in the shoes of VA if they go under, maybe that just means that after this crisis, there isn't enough market for more than 1 player? Nature abhors a vacuum. IF and its a big IF QF/Jetstar found themselves in a monopoly position for a short while, say 6-12 months, then the federal government can with a stroke of a legislative pen price cap fares. Shortly after a foreign (or local) company would move into the vacuum left by VA, just like VB did after Ansett died. I admit they already had nine aircraft up and running at that time.

[ozbiggles]

It will be interesting to compare peoples posts when we are back here in 6 months talking about bailing Qantas out with Government money.

[t_cas]

To be balanced.... both QF and VA have cash reserves aside to weather some financial emergencies. The median for airlines in the Asia Pacific is 1 months cash reserves.

so my opinion.... both Australian groups are placed well on the stage when compared globally.

This event is not something any business can “plan” for. Being regulated out of the market is not something you would expect.

Put the knives away, let this play out as it should.

The groups and as many businesses as possible should be assisted as if the government had not shut the doors on the economy and the market in which they freely competed in prior to this war on Carona.

[RodH]

This news item is from the Executive Travellers web site and just posted a short time ago.
Good news for everyone.
In a message to staff on a private Virgin Australia Facebook group posted this evening, and seen by Executive Traveller, CEO Paul Scurrah noted "I am aware that Qantas communicated to their people that they had been 'directed' by the Australian Government to operate a 'minimum domestic network'."

"Upon hearing this I immediately contacted the Deputy Prime Minister, who denied any such deal was in place and that both airlines will be treated equally."

"The good news is that he called me tonight to say we will be offered the opportunity to operate a 'minimum domestic network' subsidised by the Australian Government," Scurrah continued. "We will be in discussions with the Australian Government tomorrow to work through the detail.

[The Bullwinkle]

This news item is from the Executive Travellers web site and just posted a short time ago.
Good news for everyone.
In a message to staff on a private Virgin Australia Facebook group posted this evening, and seen by Executive Traveller, CEO Paul Scurrah noted "I am aware that Qantas communicated to their people that they had been 'directed' by the Australian Government to operate a 'minimum domestic network'."

"Upon hearing this I immediately contacted the Deputy Prime Minister, who denied any such deal was in place and that both airlines will be treated equally."

"The good news is that he called me tonight to say we will be offered the opportunity to operate a 'minimum domestic network' subsidised by the Australian Government," Scurrah continued. "We will be in discussions with the Australian Government tomorrow to work through the detail.


Unfortunately the WA Premier didn’t get the memo it seems......

The Western Australian government may underwrite flights to get people stranded due to COVID-19 back home and residents home.

Premier Mark McGowan is looking at options to fly out about 650 passengers from the Vasco Da Gama cruise ship who have completed their 14-day quarantine period in Perth.

Most are from the eastern states while a few are from overseas.

The passengers finished their quarantine on Friday and have been moved to a Perth hotel, until they can fly home.

Mr McGowan told reporters on Sunday that the state may have to work with Qantas to underwrite flights to get people home, and Western Australians back in the state.

"Getting them home is not easy... Virgin has essentially stopped, Qantas has wound back its flights so much that it's very difficult to get flights home for these people," Ms McGowan said.

"It may mean the state needs to work with Qantas to support flights or underwrite flights to get people from the east home but also to get West Australians back here."

[cunnamullafella]

When McCormack was asked on AM Agenda yesterday on Sky if VA would be given funding he was non commital and said all options were being looked at. I don’t work for VA but it definitely wasn’t a NO.

[Transition Layer]

The communication about the Govt “directing QF to operate a minimum domestic network” came from the head of Domestic Cabin Crew. Hardly what I would consider an authoritative source and he may indeed have been getting his terminology wrong.

On the other hand, here is what the QF Chief Pilot had to say about the matter as recently as Friday:

TEMPORARY NETWORKS

We continue to work with the Australian Government on temporary International, Domestic and Regional networks. This is about maintaining some level of connectivity where there is little commercial demand.

While there is no update on the Domestic and Regional networks yet, we have had to delay the first International flights due to the government’s decision to remove the quarantine exemption for operating crew.


I know which source I’ll believe. Looks like the head of cabin crew may have been jumping the gun a bit and hopefully gets more than a rap on the knuckles for it.

[Progress Wanchai]

There's your answer. Print more money! LOL. Why do they even bother to tax us when the government can print more money at will?

Because printing money doesn’t fix the problem as money then loses its value. When money loses value it affects those that rely on it the most. ie, savers (generally retirees) and the working class who live pay check to pay check.
Who it benefits is the asset owning class as inflation pushes up the price of assets. In affect printing money transfers wealth but doesn’t create it in the same way tax doesn’t destroy wealth but transfers it.

Imagine what would happen to the price of gold if the government declared house bricks painted yellow had the same value as gold bullion. It’d be to the benefit of those with lots of bricks and yellow paint and to the detriment of those who have gold stashed under their mattress, but it will be of no benefit to the country as a whole. This is no different to printing money.

The government has two methods to pay its bills.
Tax, which affects the rich disproportionately to the poor.
Print money. Which affects the poor disproportionately to the rich.

[RodH]

This is another pice of news from the ABC news website.
Looks like it’s credible information and that it does look good.


Federal Government is in talks with the major airlines about subsidising domestic flights in a bid to keep Qantas and Virgin Australia in the air.Key points:

The Deputy Prime Minister spoke with the bosses of the major airlines at the weekend
Michael McCormack says there are ongoing talks about subsidising domestic flights
It comes as the Government urges Australians to stay home until restrictions lift



Deputy Prime Minister Michael McCormack told the ABC he spent the weekend speaking with the bosses of both airlines, in the wake of Virgin Australia's decision to suspend all domestic flights except a daily return service between Sydney and Melbourne (https://www.abc.net.au/news/2020-04-09/coronavirus-virigin-australia-suspends-domestic-flights/12139020).

He said it was vital that flights around Australia continued to ensure people returning from overseas could get home after serving their mandatory 14 days of quarantine.

"We also need, of course, to transfer people around from capital city to capital city. So we'll be looking at that," Mr McCormack said.

"We'll be looking at what we can do in conjunction with the airlines, who are cooperative."

[Rudder Sir]

Because printing money doesn’t fix the problem as money then loses its value. When money loses value it affects those that rely on it the most. ie, savers (generally retirees) and the working class who live pay check to pay check.
Who it benefits is the asset owning class as inflation pushes up the price of assets. In affect printing money transfers wealth but doesn’t create it in the same way tax doesn’t destroy wealth but transfers it.

Imagine what would happen to the price of gold if the government decided it’d paint house bricks yellow and declare they now had the same value as gold bullion. This is no different to printing money.

The government has two methods to pay its bills.
Tax, which affects the rich disproportionately to the poor.
Print money. Which affects the poor disproportionately to the rich.

I think you may have missed the sarcasm. Of course printing money is not a long term fix, no one would argue it is.

[Progress Wanchai]

I think you may have missed the sarcasm. Of course printing money is not a long term fix, no one would argue it is.

Haha.
Cheers.

Unfortunately the RBA/Government have made noises about QE and think they can get out of this hole by digging.

[normanton]

It's great Virgin are going after some of the government subsidised flying. But be careful what you wish for Virgin, you are playing right into Allan's hand.

If Qantas get x, we want x as well. Just remember Mr. Scurrah, you are asking for xx from the government for a bailout. Don't expect Qantas not to get xx too.

That alone is even more ammunition for the government to reject your bailout request.

[RodH]

Firstly VA are not asking for a bailout, they are asking for a loan.
Secondly it would appear that BOTH VA and QF are going to be subsidised to allow some operations to commence again.
Given the above how can you say it’s playing into Alan’s hands when they are getting equal treatment at this stage?
I think it’s great to see the Government helping out such a vital Industry which is suffering at this time because of no fault of its own making.
Sure VA was not doing as well as QF for quite a while but it was improving fairly quickly and it’s correct that they do not have a big a reserve as QF or what is needed to see them through this horrible time but that is not any reason to abandon them.
Theres a hell of a lot of people who depend on VA continuing operations quite apart from its employees so there’s one hell of a lot more at stake than meets the eye.
We should all be pleased to see a helping hand being offered and not put them down all the time.
For the record I am not and never have been employed in any way by either VA or QF , I’m just a happy passenger who really enjoys flying.

[TBM-Legend]

Firstly VA are not asking for a bailout, they are asking for a loan.
Secondly it would appear that BOTH VA and QF are going to be subsidised to allow some operations to commence again.
Given the above how can you say it’s playing into Alan’s hands when they are getting equal treatment at this stage?
I think it’s great to see the Government helping out such a vital Industry which is suffering at this time because of no fault of its own making.
Sure VA was not doing as well as QF for quite a while but it was improving fairly quickly and it’s correct that they do not have a big a reserve as QF or what is needed to see them through this horrible time but that is not any reason to abandon them.
Theres a hell of a lot of people who depend on VA continuing operations quite apart from its employees so there’s one hell of a lot more at stake than meets the eye.
We should all be pleased to see a helping hand being offered and not put them down all the time.
For the record I am not and never have been employed in any way by either VA or QF , I’m just a happy passenger who really enjoys flying.



When you go for a loan, the first question the lenders ask is about your credit history followed by a look at your accounts including assets and liabilities. No lender will give you a loan if you don't pass the credit check. VA has few, if any, assets that they can pledge to support a loan. Income is another meaningful item to clearly see how you can repay a loan over and above your existing commitments and so it goes on. A "Phoenix solution" after administration with fresh capital could be a solution. The Government is not the source of that capital otherwise every struggling business in Australia would be eligible!

[ECAMACTIONSCOMPLETE]

If I go to the bank and ask for a $1 million dollar loan on my $500,000 house, I’ll be laughed out the door.

Thats essentially whst virgin are asking for ($1.4 billion loan with $700 million market value).

[Des Dimona]

If I go to the bank and ask for a $1 million dollar loan on my $500,000 house, I’ll be laughed out the door.
Thats essentially what virgin are asking for ($1.4 billion loan with $700 million market value).

Also, just the "small" issue of debt servicing with little or no income - doesn't add up.

[crosscutter]

Virgin have a market value around $700M. A request for double their market value might be framed a loan, but I’m afraid that’s where reality ends.

What is very real is industry job losses. It’s devastating and no one wants our colleagues and friends to suffer. So how should job losses be ‘allocated’ amongst the pilots? Should QAN and VAH share the load. Is that fair? I hope the government helps further to minimise the damage. Just don’t expect junior QF pilots to be jumping up and down with excitement as they lose their job for the good of duopolistic idealism. It’s not unreasonable self interest. It’s just a matter of either it’s you or me.

Finally, the situation isn’t playing into anyone’s hands. Not Alan’s or Paul’s or Tom, Dick or Harry’s. Everyone is playing the hand the situation has dealt. Survival hasn’t been secured by anyone. I do smile when some capitalistic heroes who have made their wealth crushing the competition, advise government a philanthropic holistic approach should be followed in our industry.

[RodH]

Whether a loan is justified or not is not can be debated at a later date as the Airlines look like being subsidised for a limited operation at this time.
That may well be expanded but at least things look like starting up again before too much longer.
Great for passengers trying to get home from interstate and great for staff and businesses connected with the Airlines .
Indeed a small step but it’s a start.

[Toruk Macto]

Quote:
If I go to the bank and ask for a $1 million dollar loan on my $500,000 house, I’ll be laughed out the door.
Thats essentially what virgin are asking for ($1.4 billion loan with $700 million market value).


Would you not first look at the $500 k house , see it’s location , see if it’s run down ? Could it be renovated into something that one day might be worth $5m ? Be a good loan to give if you look past the current state ?

[The Bullwinkle]

If I go to the bank and ask for a $1 million dollar loan on my $500,000 house, I’ll be laughed out the door.

Thats essentially whst virgin are asking for ($1.4 billion loan with $700 million market value).
Either you've got a bad credit rating or you need to change banks!!!

[ECAMACTIONSCOMPLETE]

Would you not first look at the $500 k house , see it’s location , see if it’s run down ? Could it be renovated into something that one day might be worth $5m ? Be a good loan to give if you look past the current state ?

Well that’s the question the credit market seems to have answered.

Even Norwegian and Caribbean cruise lines have been able to obtain loans, whereas it seems virgins final roll of the dice is with the government, which also appears set to reject them.

[normanton]

Given the above how can you say it’s playing into Alan’s hands when they are getting equal treatment at this stage?
Because Allan's been lobbying for equal treatment...... :ugh:

[B772]

1) With the VA liabilities being approx. 50% greater than the value of assets the market capitalisation of approx. $700M is meaningless.

2) The Allan Joyce viewpoint of equal treatment is for every subsidised VA flight QF receives a subsidy for 4 flights or whatever his formula is.

[SandyPalms]

This is hilarious. At a webinar about 3 weeks ago TLS told us that they had made submissions to government about a “minimum network”. He expected we might get something, probably not all of it, but the government wanted it. Has PS been asleep for the last 3 weeks? Suddenly he’s now on the case. Please tell me that ain’t true.

[normanton]

Has PS been asleep for the last 3 weeks? Suddenly he’s now on the case. Please tell me that ain’t true.
He has been too busy spending money they don't have on useless advertising trying to gather public support for his cause. It's not his fault he inherited a **** storm. Just another headless chook running around.

[ECAMACTIONSCOMPLETE]

Either you've got a bad credit rating or you need to change banks!!!

do you think virgin has a good credit rating with its balance sheet and 10 years of losses?

S&P recently downgraded it to junk status

[The Bullwinkle]

do you think virgin has a good credit rating with its balance sheet and 10 years of losses?

S&P recently downgraded it to junk status
Your statement was "If I go to the bank and ask for a $1 million dollar loan on my $500,000 house, I'll be laughed out the door."
My advice for you to go to another bank was for you personally!
I could easily obtain loans for double the value of my house and I certainly wouldn't be laughed out the door, that's all I was saying.

[ECAMACTIONSCOMPLETE]

Your statement was "If I go to the bank and ask for a $1 million dollar loan on my $500,000 house, I'll be laughed out the door."
My advice for you to go to another bank was for you personally!
I could easily obtain loans for double the value of my house and I certainly wouldn't be laughed out the door, that's all I was saying.

it was an analogy...

the thread is about virgins finances, not mine

I don’t really own a $500,000 house, it was a crude example of virgins situation, im sorry you’re confused

my understanding of the home loan system is that you can only borrow 80% of the value of the house, without mortgage insurance.

Is my understanding wrong or are you just gloating about your personal finances?

[chookcooker]

it was an analogy...

the thread is about virgins finances, not mine

I don’t really own a $500,000 house, it was a crude example of virgins situation, im sorry you’re confused

no, you said “Thats essentially whst (sic) virgin are asking for”

[B772]

Goldman Sachs have released a report on airlines in the area:

Air New Zealand. Current price $0.90 Recommendation Sell Target price $0.54

Qantas. Current price $3.55 Recommendation Neutral Target price $3.03

Virgin Australia Current price $0.085 Recommendation Sell Target price $0.03

[ECAMACTIONSCOMPLETE]

Okay, I’ll try and reword it.

if I’m trying to borrow $1 million dollars using my $500,000 house as collateral, I’ve made no income for 10 years and I already have a mountain of credit card debts, I can’t be shocked when the bank rejects me.

I hope this this clears it up :)

[normanton]

Okay, I’ll try and reword it.

if I’m trying to borrow $1 million dollars using my $500,000 house as collateral, I’ve made no income for 10 years and I already have a mountain of credit card debts, I can’t be shocked when the bank rejects me.

I hope this this clears it up :)
But did you offer them equity 3 years down the line when you can't pay it back? This is where you have gone wrong. You should seek financial guidance. :8

[chance]

If VA wants a $1.4 B Loan from Government over three years then that amounts to three yearly equal re-payments of circa $466M as a simple example. Given the recent balance sheets the question to ask is will there likely to be a surplus of funds to service that debt with the other likely increases that all the supply chain sufferers will try an claw back to cover their own losses. Just watch the price of fuel as one example.
Govt may well decide that two mainline carriers are desirable grant the loan and take an equity position in any unpaid portion of the loan at the end of year 3 and then sell that down over time.
That may well be the only option as the complexity of the current VA opex/capex ratio does not give much room to move from looking at they balance sheet. Govt would also need to be sure Scurrah's restructuring and market positions moves to sort mess left by Il Duce are sound, which on balance they appear to be.
It is also likely that the QF Board will move on the Irishman in due course after they celebrate their 100th Birthday later this year and he may well be replaced by someone less adversarial but maybe not as competent, so lots of balls in the air for both players. There is unlikely to be any cabotage and I doubt any foreign buyer will be in a position to but VA and its debts and well as funding the VA opex in the next few years.

[Icarus2001]

Seems to me that some posters believe the governments desire for a limited domestic network, underwritten by the government, is connected to VAs request for $1.4 billion, they are unrelated.

[Synergies]

"It takes two to keep the air fair, and the airfares fairer" Interesting article in the Australian today.

[WipperSnapper]

I have been trying to think what PS plans to do if granted the loan he is asking for. There's a few ways I am thinking he could be playing this.

1- The credit market isn't willing to lend him any money in the current environment. He plans to go and borrow the money over the next 3 years, once flying resumes and there is a steady stream of revenue coming in, from other sources to pay the government back in full.
2- He has no plan to pay it back. At current market value that would make VA 66% government owned and change the board influence from rivaling airlines.
3- A mix, he plans to pay back part of the loan and provide the government with either a majority 51% or a minority stake in the company.

The situation is allowing him to accelerate his right-sizing program. He has already made 1750 people redundant, most would agree there will be a lot more on the other side of this. He will be using the situation to lower costs everywhere possible, get out of every contract possible or renegotiate.

[Vindiesel]

The Australian tonight reporting that VAH is looking at a major debt restructure by a Deed of Company Arrangement or creditor's Scheme of Arrangement.

[wheels_down]

Coming out of Canberra right now.

It could propel SQ to take it over. Forget the others. Remains to be seen.

Next 24hrs will be interesting.

Federal Treasurer Josh Frydenberg wants to maintain two airlines in Australia and could set the ball rolling by issuing $1.4 billion in convertible debt to Virgin Australia, convertible at $1, which would decimate shareholders.

The offer would need shareholder and bondholder support but would precipitate the change in ownership necessary to help the airline survive.

The proposal would wipe out shareholders’ equity but if the money was not repaid on time, and all going to plan, it would allow the government to sell its stake in the airline at - hopefully - a profit.

The proposal is not quite as simple as suggested because bondholders among its $5.1 billion in debt would also have a say.
The Virgin debt has a clause which requires it to be renegotiated if a new equity holder takes control, which means if the government was to take control it would also need to deal with the bondholders.

Existing shareholders don’t need to renegotiate the debt so if the dream deal happened and Singapore Airlines took control, bondholders would be sidelined.
READ MORE:Virgin’s plea: help us across the bridge (https://www.theaustralian.com.au/business/aviation/virgins-plea-help-usacross-the-bridge/news-story/93479c3652bd84206a63eb669644c265)|Better uses for $1.4bn than Virgin (https://www.theaustralian.com.au/business/aviation/universities-a-better-use-of-14bn-than-virgin-australia/news-story/134906f5563b4adeb295bab77caca311)|It takes two to keep the air fair (https://www.theaustralian.com.au/business/media/it-takes-two-to-keep-the-air-fair-and-the-airfares-fairer/news-story/3117841a4bec513c1bcbcc0ed2764181)|A Virgin collapse ‘bad news for nation’ (https://www.theaustralian.com.au/business/aviation/a-virgin-australia-collapse-bad-news-for-nation-says-former-ceo/news-story/bc346ecce60840a6671fc30e31296adc)|Grounded airlines fight to survive (https://www.theaustralian.com.au/business/aviation/grounded-airlines-fight-to-survive/news-story/a90d321a52f85ac25f6658e42c806e41)|Troubled Virgin reduced to a wing and industry prayers (https://www.theaustralian.com.au/inquirer/troubled-virgin-reduced-to-a-wing-and-industry-prayers/news-story/36e6138550f90acca938d78aa3aae5c8)The suggestion comes as some confusion surrounds Deputy Prime Minister Michael McCormack’s suggestion he has given the airline industry $1 billion in support to manage through the shutdown of the industry.

None of this money promised last week has ended up in the industry’s hands except, it seems, $250 million which will go to Airservices Australia.

Airservices Australia is the government entity in charge of air traffic control and allied operations and the money will go to its account to compensate for the loss of revenue from the shutdown airlines.

The $720 million promised to the industry is in the form of discounts in charges which would have been, or were levied, since February.

The government will also set down the new routes applying under the shutdown, which will have Virgin and Qantas flying more than they do now on an underwritten basis. Currently Virgin is flying just (https://www.theaustralian.com.au/business/aviation/qantas-books-95pc-reduction-in-travel-for-easter-in-coronavirus-hit/news-story/5b82c3c526e6d9b30afd8f0eb2c164b6)Melbourne to Sydney one day a week.

Qantas, which normally flies the route 48 times a week, will be down to five times a week, among services to other centres.

The services are designed to cover emergencies and will largely be carrying freight.

The five airlines which have invested in Virgin have already had the value of their investments cut but this will all but disappear under any bailout package.

By way of example Singapore Airlines entered the Virgin register in 2012 with a 10 per cent stake and in 2013 acquired another 10 per cent at 48 cents a share, or $126.6 million. This would value 20 per cent at $253.2 million.

Its 20 per cent stake is now worth $167 million and under the convertible note proposal it would be worth virtually zero.

Given equity holders face being wiped out under any survival package, they would probably support the debt package if it meant keeping Virgin afloat.

But given any deal would virtually wipe out their equity and none of the holders are flush with cash due to their own domestic pressures, a Singapore Airlines takeover may look like a better alternative.

The government would back the move, which would please the Singapore government-controlled airline.

But there are a few steps to walk before the transactions occur.

[non_state_actor]

Looks like VAH are in play. If Singapore get it will be QF's longstanding worst case scenario. They have always feared Singapore in the Australian market and the Pacific.

[DanV2]

Looks like VAH are in play. If Singapore get it will be QF's longstanding worst case scenario. They have always feared Singapore in the Australian market and the Pacific.

Yeah nah. SIA has been planning to "take over" VAH for the past 5 years and it's all turned out to be "fake news" every time.

Also, QF isn't likely to fear "SIA" anytime soon, SIA has a prior dismal record with their record in Australia.
Strike 1: Air New Zealand (including Ansett) 25%
Strike 2: Tiger Airways Australia - 100% via Tiger Airways Holdings.
Strike 3: Virgin Australia 20%

Even with full control of their second attempt in Australia (Tiger Airways), SIA still couldn't get it right with the maintenance debacles. Their VAH shareholdings has just been a complete mess with 4 competing shareholders at the table, SIA has had plenty of opportunities to "take over VA" over the years but chose not to do so.

The Air NZ/Ansett bankruptcy debacle is self explanatory.

If SIA couldn't get their prior attempts right (especially when they had full control of their 2nd attempt through Tiger), there's little chance of SIA getting a "4th attempt" right.

[Paragraph377]

Looks like VAH are in play. If Singapore get it will be QF's longstanding worst case scenario. They have always feared Singapore in the Australian market and the Pacific.
Oh my Lordy, won’t the little Irish toad be upset if that happens! Strong and Dixon were concerned about a potential entity like SQ filling the Ansett gap but the foreign ownership laws prevented that from happening at the time. Well that was part of the reason. The parasite Joyce will be puckering with fear and anger at the mere thought of some aid being given to keep VA afloat. However, seeing is believing.

[Ragnor]

Well that’s good, VA get the money they need, QF will also get more money. Win win what’s the problem?

[Section28- BE]

Oh Dear-

HOW 'short' the memories................., 'Rupert'- 'they' (a funny looking Bloke, he 'was'- believe, his name 'was' John???, or some-such???) did, make a point of getting Rupert 'Out'..............., 'Keith Rupert' per chance????

Stuffs me!!!

Good Luck Paul & 'All'..........

Rgds all- Stay Safe
S28- BE

[VH-ABC]

Does anyone here speak Section 28- BE?

[Section28- BE]

Think!!!!- No, Not the ATIS.

Rgds ABC.
S28

[dontgive2FACs]

Looks like VAH are in play. If Singapore get it.

Serious question here as I don’t understand the business processes completely but very interested.

I thought SIA were already about 20% shareholder in VAH. Why would SIA then invest more money into VAH at the present time? (ie would that not expose themselves more to the massive asset/debt problem).

- Rather than try to trade out of the situation, would they not be best to wait until VAH in administration/collapse and then pick the assets up cheaply?
- In event of collapse, how would they be responsible to creditors as a present shareholder?
- Assuming they want to enter DOM market and reinvest after VAH administration/COVID, it would make things fairly interesting with foreign ownership laws. What type of business strategy would they use to get around this?

Hopefully none of this needed but very interested to understand the process if anyone able to explain.

Cheers

[cloudsurfng]

Oh my Lordy, won’t the little Irish toad be upset if that happens! Strong and Dixon were concerned about a potential entity like SQ filling the Ansett gap but the foreign ownership laws prevented that from happening at the time. Well that was part of the reason. The parasite Joyce will be puckering with fear and anger at the mere thought of some aid being given to keep VA afloat. However, seeing is believing.

i don’t think he will be Puckering with fear. Whatever it is will be enough to keep VA afloat, and that is all. It’s not going to to make VA flush with cash or put it on level terms. Just keep it afloat. Still have to trade and make money, something which has been an ongoing challenge for VA, as you like to remind everyone. It’s not like getting this injection suddenly makes VA the dominant airline with more market share. Just keeps people in jobs. And as a QF pilot, I’m pretty happy with that.

[non_state_actor]

Serious question here as I don’t understand the business processes completely but very interested.

I thought SIA were already about 20% shareholder in VAH. Why would SIA then invest more money into VAH at the present time? (ie would that not expose themselves more to the massive asset/debt problem).

- Rather than try to trade out of the situation, would they not be best to wait until VAH in administration/collapse and then pick the assets up cheaply?
- In event of collapse, how would they be responsible to creditors as a present shareholder?
- Assuming they want to enter DOM market and reinvest after VAH administration/COVID, it would make things fairly interesting with foreign ownership laws. What type of business strategy would they use to get around this?.

All bets are off if it goes into administration and they will have no control of the outcome. In the meantime the Government may offer a loan to support the balance sheet, Singapore get to wipe out all the other airlines, get 100% feed from the Australian market through Singapore and quite possibly negotiate Pacific rights for Singapore Airlines whilst simultaneously castrating some of their biggest competitors in the region. They might be seeing it as a chance to expand Singapore Airlines through Australia. Virgin get a rebrand to something else, only do short haul, whilst Singapore get to do all the International in Widebody aircraft.
The only reason they would move now would be control and certainty of outcome. You have no control over administration, bit like deciding between taking a plea bargain or going to court.:}

The risk for them will be as you pointed out is the large exposure they will hold.

[DanV2]

All bets are off if it goes into administration and they will have no control of the outcome. In the meantime the Government may offer a loan to support the balance sheet, Singapore get to wipe out all the other airlines, get 100% feed from the Australian market through Singapore and quite possibly negotiate Pacific rights for Singapore Airlines whilst simultaneously castrating some of their biggest competitors in the region. They might be seeing it as a chance to expand Singapore Airlines through Australia. Virgin get a rebrand to something else, only do short haul, whilst Singapore get to do all the International in Widebody aircraft.
The only reason they would move now would be control and certainty of outcome. You have no control over administration, bit like deciding between taking a plea bargain or going to court.:}

The risk for them will be as you pointed out is the large exposure they will hold.

SIA isn't that stupid to take on $5.5B in debt. It'll also fizzle out be "fake news", just like the 5424324324324323+ "SQ to Take Over VA" articles before this one.

Even if Virgin was offered to SIA for $1 including the $5.5B+ debts, they won't be that stupid and they'll follow their predecessors that faced the same situation with Ansett and will also decline the $1 offer.

Remember that SIA was in the same situation with Ansett (through their 25% shareholding in Air New Zealand) when Air New Zealand got desperate after mismanaging Ansett in oblivion.

After Air NZ's then-owner Brieley couldn't get the NZ govenrment to budge on their foreign ownership limits (which was 35% at the time - was also rumoured Dixon from QF lobbied the NZ government not to lift foreign ownership limits to 49%), NZ offered Ansett to Singapore for $1. SQ declined the offer.

NZ also offered Ansett to Qantas for $1 after Singapore declined. QF also declined.

After that NZ sent AN into voluntary administration.

[non_state_actor]

SIA isn't that stupid to take on $5.5B in debt. It'll also fizzle out be "fake news", just like the 5424324324324323+ "SQ to Take Over VA" articles before this one.

Even if Virgin was offered to SIA for $1 including the $5.5B+ debts, they won't be that stupid and they'll follow their predecessors that faced the same situation with Ansett and will also decline the $1 offer.

Remember that SIA was in the same situation with Ansett (through their 25% shareholding in Air New Zealand) when Air New Zealand got desperate after mismanaging Ansett in oblivion.

After Air NZ's then-owner Brieley couldn't get the NZ govenrment to budge on their foreign ownership limits (which was 35% at the time - was also rumoured Dixon from QF lobbied the NZ government not to lift foreign ownership limits to 49%), NZ offered Ansett to Singapore for $1. SQ declined the offer.

NZ also offered Ansett to Qantas for $1 after Singapore declined. QF also declined.

After that NZ sent AN into voluntary administration.

Yes that is the risk they are taking. I guess they have to decide if an opportunity to capture the Australian market is worth it. I'd bet a small wager that Singapore would also push for access to the Pacific for them as well as they are in a very strong bargaining position and something they have coveted for a eternity.

[Paragraph377]

Oh Dear-

HOW 'short' the memories................., 'Rupert'- 'they' (a funny looking Bloke, he 'was'- believe, his name 'was' John???, or some-such???) did, make a point of getting Rupert 'Out'..............., 'Keith Rupert' per chance????

Stuffs me!!!

Good Luck Paul & 'All'..........

Rgds all- Stay Safe
S28- BEHe is an interesting commentator and he has been around the traps. I think he is referring in part to Rupert Murdoch’s Newscorp owning a stake in Ansett in the 90’s? Dunno. Good old days - Murdoch and Abeles, arch enemies teaming up at Ansett.

[DanV2]

Yes that is the risk they are taking. I guess they have to decide if an opportunity to capture the Australian market is worth it. I'd bet a small wager that Singapore would also push for access to the Pacific for them as well as they are in a very strong bargaining position and something they have coveted for a eternity.

The Pacific route isn't that 'high yielding' as it used to be. Especially during the era when there was 3 cartels on this route QF/AA, DL/VA and UA.

Post COVID-19 may possibly see it go back to QF and UA again, with the former concentrating primarily on LAX and DFW with their JV partner AA codesharing, and UA retreating to SFO.

The Australian Government isn't likely to budge on 5th freedom rights. SQ's application was declined by both Australia and the USA's DoT.
I remember that even though the US DoT approved AC's 5th freedom application, the Australian authority decided to decline AC's application on the route in the late 90s when AC proposed YYZ-LAX-SYD as an alternative to SQ's SIN-SYD-LAX.

[Buster Hyman]

Currently Virgin is flying just (https://www.theaustralian.com.au/business/aviation/qantas-books-95pc-reduction-in-travel-for-easter-in-coronavirus-hit/news-story/5b82c3c526e6d9b30afd8f0eb2c164b6)Melbourne to Sydney one day a week.
Qantas, which normally flies the route 48 times a week,
Really? No wonder its so hard to make a buck in Aviation.

[krismiler]

The Australian Government want Virgin to continue but don't want to save it themselves so how about they let SIA take it over, ie full ownership and control rather than a minority shareholding ? In return for assuming the liabilities and keeping all the staff on, they get full access to the domestic market which is what they always wanted. Lose everything except the B737s which effectively become SIA domestic short range. Long range, such as PER - BNE is done by extending the current flights from Singapore. SIA fly to most major Australian airports multiple times a day anyway so all the infrastructure is already in place , eg maintenance coverage, check in desks, lounges. Even without Virgin, SIA could run a significant domestic network on its own eg. SIN - PER - BNE - SIN and SIN - BNE - PER - SIN gives a return flight between Perth and Brisbane and still keeps Singapore as a non stop routing. Multiply that with other city pairs and you have a basic network going very quickly. If the approval was given, all they need to do is load the flights into the reservations system and alter the advertising a bit. They will certainly have plenty of spare capacity post COVID - 19.

This time QF would have a competitor that wouldn't be undermined by JQ as it would be pulling in higher end less price sensitive pax. SIA would be very attractive to the corporate market as it begins its slow climb back, with a proper business class product and Star Alliance membership. The SIA brand is very well established already and with the strong links between Australia and Singapore there are no security concerns which might occur with an Air China take over. Qantas could be defending a 50% line in the sand rather than a 65% one in terms of market share.

The deal could be sold on the basis of keeping Australians employed in these troubled times and maintaining competition thereby keeping fares down, it would also stop Qantas from becoming too powerful. With the current exchange rate AU$5.1 billion is loose change to Singapore Incorporated and will certainly pay back in the long term.

In normal times QF could simply get the choir singing "I still call Australia home." as an accompaniment to a nationalistic advertising campaign about protecting Australian companies. These aren't normal times, now SIA would be saving Australian jobs directly and indirectly with a takeover.

[DanV2]

The Australian Government want Virgin to continue but don't want to save it themselves so how about they let SIA take it over, ie full ownership and control rather than a minority shareholding ? In return for assuming the liabilities and keeping all the staff on, they get full access to the domestic market which is what they always wanted. Lose everything except the B737s which effectively become SIA domestic short range. Long range, such as PER - BNE is done by extending the current flights from Singapore. SIA fly to most major Australian airports multiple times a day anyway so all the infrastructure is already in place , eg maintenance coverage, check in desks, lounges. Even without Virgin, SIA could run a significant domestic network on its own eg. SIN - PER - BNE - SIN and SIN - BNE - PER - SIN gives a return flight between Perth and Brisbane and still keeps Singapore as a non stop routing. Multiply that with other city pairs and you have a basic network going very quickly. If the approval was given, all they need to do is load the flights into the reservations system and alter the advertising a bit. They will certainly have plenty of spare capacity post COVID - 19.

This time QF would have a competitor that wouldn't be undermined by JQ as it would be pulling in higher end less price sensitive pax. SIA would be very attractive to the corporate market as it begins its slow climb back, with a proper business class product and Star Alliance membership. The SIA brand is very well established already and with the strong links between Australia and Singapore there are no security concerns which might occur with an Air China take over. Qantas could be defending a 50% line in the sand rather than a 65% one in terms of market share.

The deal could be sold on the basis of keeping Australians employed in these troubled times and maintaining competition thereby keeping fares down, it would also stop Qantas from becoming too powerful. With the current exchange rate AU$5.1 billion is loose change to Singapore Incorporated and will certainly pay back in the long term.

In normal times QF could simply get the choir singing "I still call Australia home." as an accompaniment to a nationalistic advertising campaign about protecting Australian companies. These aren't normal times, now SIA would be saving Australian jobs directly and indirectly with a takeover.

You are assuming that SIA wants to take over, SIA had plenty of opportunties to "take over" in the past and they haven't. If SIA really wanted into the Australian market, they would've "taken over" VA by now instead of fizzling out the 43243423432432+ "fake news" articles in the past 5 years.

SIA are also not that stupid to pick up a $5.5B debt ridden company for a $1. SIA faced the same situation with Ansett in 2001 when a desperate Air NZ offered AN for $1 (with debts and liabilities included).

Also as mentioned, SIA aren't "that competent" at operating in the Australian domestic market, as evidenced by their 3 prior failures in the Australian market, which includes the Tiger Airways debacle when running that operation out of the sheds in Melbourne. QF has nothing to worry about, even if SIA picks up the VA scraps at a liquidation sale.

SIA may be well known in the Australian market, but their record of running companies outside of their own brand has been dismal overall. Air NZ/Ansett, Virgin Atlantic, Tiger Airways Australia and Virgin Australia are 4 examples of SIA's failures.

SIA are not much better than EY when it comes to equity investments, dismal at best (including 1 bankruptcy - possibility 2 bankruptcies) when compared to EY's string of bankruptcies.

SQ aren't the "so-called Messiah" that many people claim to be. Considering the string of of incompetence decisions they've been involved in with their investments over the years.

[crosscutter]

It seems debt is being restructured. So who owns the debt, who are the major bondholders and are they going to be satisfied with the restructure?

if the airline was faced with a wipeout the debt holders are faced with getting cents per their dollar of debt. They will grasp on to any alternative to recoup and have a say in some of their debt ‘investment’. The term may be secured creditors but the sleepless nights say otherwise.

For the hardworking employee at least the Borg Balance Sheet Disaster looks to be heading in a direction with a future.

[DanV2]

Virgin Australia had just called a Trading Halt this morrning.
https://www.asx.com.au/asxpdf/20200414/pdf/44gxk8qjtq4344.pdf

It's either related to:
Frydenberg's announcement yesturday, and/or
Virgin Australia appointing Houlihan Lokey as Debt Restructure Administrators yesturday.

[DanV2]

https://www.theaustralian.com.au/business/aviation/virgin-australia-in-trading-halt-amid-rescue-hopes/news-story/824296b891d92d2a8dc9bb512ff8a431

Virgin Australia went into a trading halt on Tuesday and whether it emerges is up in the air, with the best hope being some sort of federal government support.

Virgin chief executive Paul Scurrah spent the Easter weekend (https://www.theaustralian.com.au/business/aviation/virgin-ceo-is-eleventhhour-14bn-canberra-loan-lifeline-call-debt-restructure-on-cards/news-story/3e52c31c21e8e8ce524b10a10366aab8)calling federal government ministers and opposition frontbenchers in a bid to secure support ahead of a cabinet meeting today that could decide the debt-heavy airline’s future.

A Virgin spokesman said the trading halt was requested as the company continued to consider ongoing issues with respect to financial assistance and restructuring alternatives.“This has arisen due to the unprecedented COVID-19 crisis which has particularly impacted the aviation sector,” the spokesman said. “We value the ongoing support of our customers.”

It comes as the Morrison government comes under increasing pressure to help the airline stay afloat and maintain a competitive airline market for when the COVID-19 crisis lifts.

Canberra has so far been reluctant to commit to anything, hoping Virgin can first do a deal with debt and equity holders who both face losing much of their investment.


The $2 billion in unsecured debt is spread across five bond issues trading at between 35 and 50 cents in the dollar.

One bond is trading in Australia and is presently at 37 cents in the dollar.

The rest of the debt, around $3 billion, is secured against aircraft and is more complicated to organise, so the plan to is to deal with unsecured holders as one vote and the five equity holders - all foreign airlines and in an equally difficult financial position - as the other group.

The dream deal would be to get 20 per cent stake holder Singapore Airlines to invest but Mr Scurrah is not banking on that happening.

His best hope is some sort of government guarantee in a deal which will see the equity and unsecured debt all but wiped out.

The federal government will on Tuesday release details of a deal (https://www.theaustralian.com.au/business/aviation/cabinet-to-consider-taxpayer-subsidy-for-virgin-qantas-domestic-flights/news-story/b488d70c8fb9cf1b471010e95b7121ae)with Qantas and Virgin to underwrite a skeleton network across Australia, but this will not save Virgin.

The timing of any deal will determine whether Virgin emerges from a trading halt early next week.

Mr Scurrah has attempted to put together a package which may save the airline.

International routes are gone, Tiger’s future is in doubt and the airline will focus its efforts on the domestic market.

His predecessor John Borghetti built an airline aimed at taking market share from Qantas, more than making money.

Mr Scurrah is putting all his cards on the last option - making money in the most difficult environment for global aviation.

All options are on the table including voluntary administration, but that is hoped to be avoided and instead Mr Scurrah is trying to do a deal with the debt and equity holders.

He has investment bankers Houlihan Lokey and UBS helping him on the job.

Canberra has studiously avoided committing itself to any package for fear it will set in train a congo line of companies wanting a similar deal.

But it also has not ruled out backing Mr Scurrah and has made clear it wants two domestic carriers.

Virgin Australia said today it had been keeping the “air fair” in Australia for 20-years and the company wanted to continue to provide a valuable service to all Australians.

The airline employed 16,000 people “directly and indirectly” and its continued operation would enable the broader economy to restart quickly once the crisis had eased, he said.

[Toruk Macto]

Good luck to Virgin employees today .

[krismiler]

The Virgin directors are obviously worried about being called in for trading whilst insolvent, the airline is grounded at the moment anyway but forward ticket sales are available eg BNE - SYD in July is still being offered on the website. Once the travel agents stop selling their tickets and insurers refuse coverage for bookings it's generally game over.

Australia has never had two airlines which competed equally in domestic, regional and international. Ansett was great domestically but once you wanted to go overseas things fizzled out quickly, same with Virgin, neither of them came close to the reach or frequency of Qantas. Having two strong major airlines, each with a 50% share might be seen in government as a better option than a dominant Qantas with its competitor going bust every ten years or so. A balance would be achieved and hopefully both airlines would be profitable, paying taxes and supporting Australian jobs and businesses.

Cathay Pacific threatened to start an Australian operation if Jetstar Hong Kong got going, but that seems to have died off, and CX have more than enough problems at the moment anyway.

It all depends on what's on the table, how much of a financial commitment is needed from a potential rescuerer and what's on offer in return.

SIA also have a joint venture airline in India called Vistara, anyone going into the Indian aviation needs have an adventurous spirit.

[DanV2]

The Virgin directors are obviously worried about being called in for trading whilst insolvent, the airline is grounded at the moment anyway but forward ticket sales are available eg BNE - SYD in July is still being offered on the website. Once the travel agents stop selling their tickets and insurers refuse coverage for bookings it's generally game over.

Australia has never had two airlines which competed equally in domestic, regional and international. Ansett was great domestically but once you wanted to go overseas things fizzled out quickly, same with Virgin, neither of them came close to the reach or frequency of Qantas. Having two strong major airlines, each with a 50% share might be seen in government as a better option than a dominant Qantas with its competitor going bust every ten years or so. A balance would be achieved and hopefully both airlines would be profitable, paying taxes and supporting Australian jobs and businesses.

Cathay Pacific threatened to start an Australian operation if Jetstar Hong Kong got going, but that seems to have died off, and CX have more than enough problems at the moment anyway.

It all depends on what's on the table, how much of a financial commitment is needed from a potential rescuerer and what's on offer in return.

SIA also have a joint venture airline in India called Vistara, anyone going into the Indian aviation needs have an adventurous spirit.

Also add to fact that SIA has been pumping $$ in Vistara before COVID-19 with their 49% stake, even buying planes for Vistara suggests Virgin Australia is NOT a priority for SIA.

However the timing of SIA buying 787s for Vistara, followed by COVID-19 hitting suggests that they have a long task ahead on their hands as long-haul travel in general will take a long while to rebound, although Indian travel may (or may not) rebound quicker than Australia.

Like with VA, perhaps Vistara should stick to domestic and short haul international (and put long haul on the back burner) for the mean time when COVID-19 subsides. Yes it would mean SIA and TATA (the 51% shareholders) may have to write down the investments on their recent 787 acquisitions..

[RodH]

Looks like we are in for a long wait before we hear anything.
When we eventually hear let’s hope there’s some good news for VA , it’s employees and the travelling public.
“ Stay around Virgin, we need you “

[wheels_down]

If the Government does not come to the party, what is next? Probably 800m left.

Can they position toward a Domestic only operation with 40-50 737s? With the cash that they still have.

[normanton]

Hopefully something comes good of it.

[Double_Clutch]

Good luck to Virgin employees today .

Whats happening today for the employees @ VA?

[wheels_down]

Whats happening today for the employees @ VA?
Well if they possibly have a job or not?

Government Support = Continued Operations
No Support = File for Administration

[DanV2]

VA basically just told their shareholders, you can either cough up or we'll either take the debt restructure option and/or send the joint into "voluntary administration".

Either way, whatever the path VA takes, the shareholders will have the stakes diluted either way. SQ, EY, HNA et al will get "sacked" from their roles as shareholders if VA files voluntary administration.

https://www.news.com.au/travel/travel-advice/flights/coronavirus-virgin-australia-forced-into-trading-halt-amid-pandemic/news-story/a505cf7365dbd510a5adf77c1a5f7d92

[machtuk]

Good luck to Virgin employees today .

DITO.....all the best guys/gals -:)

[The Bullwinkle]

VA basically just told their shareholders, you can either cough up or we'll either take the debt restructure option and/or send the joint into "voluntary administration".

Is that what actually happened?

[Buster Hyman]

Can't see Administration helping them, just like '01, the industry is in turmoil & it's no time to invest in airlines.

[krismiler]

If Virgin does go into administration it gets instant protection from creditors and if there is $800 million or so in the bank that should allow for a period of operation whilst the future is worked out. The administrators won't allow it to run at a loss so basically it will just be the peak hour flights between main centres with the dear tickets that continue. Every employee's job gets looked at and those deemed unnecessary are laid off. Costs are ruthlessly cut as the administrators are on the hook for every debt incurred by the company once they take over, if there isn't enough in the kitty it will be down to them to pay the bill themselves.

The administrators run the show and the creditors will make the final decision. I previously worked for a company which went into administration and can still remember walking into the GM's office and finding him sitting at a small table in the corner whilst the new appointee made himself comfortable behind the main desk.

During this period a creditors committee is formed and they get to decide what happens. Basically the two options on offer are:

1. Wind things up, sell off the assets and get back a percentage of what's owed.

2. Restructure the company so it's profitable which generally involves cutting out loss making areas and reducing staff numbers. Also debts are examined and proposals made which involve writing off a percentage of what's owed and/or more favourable terms for the balance, eg write off 20% of the debt, defer payments for a year and extend the repayment period with a lower interest rate. This is a very good time for a potential purchaser to come in as all the difficult work has been done and they are seen as a saviour, backs are up against the wall and substantial losses or redundancies are the next step. Negotiations are very one sided to say the least as they only need to pay the creditors a bit more than they would receive in a fire sale, and can take on the employees they want on the terms they want.

The purchaser gets to take over a company which is restructured into going concern on their terms, rather than moving in early, being liable for debts and having to negotiate with the unions.

[halas]

Krismiler. You forgot to mention that the administrator pays themselves first. Handsomely.

halas

[wheels_down]

It’s hard to see where this is going.

The Treasurer just now spoke that they (airlines) need to speak to specific shareholders about its financial needs.

But then these comments that popped up today around the debt/equity, reeks of a deal being done in some form.

Etihad won’t chip in a cent. I mean they will just dispose of the stake, won’t mean much to them, past management errors.

PS is a finance man inside out. If the numbers don’t align he won’t drag it on. He will make the closedown call fairly quickly.

It seems it’s up to Singapore. The silence in their involvement in the last few years is the problem.

[Toruk Macto]

Would have been a nice project for someone over Easter , talking to the Emirates , Beijing and Singaporeans , asking for more money or walk away from their investment.

[blubak]

Good luck to Virgin employees today .
Couldnt agree more,its so sad for all that turn up & give their all every day to keep this airline going.
Shame on the majority shareholders who now are in hiding & basically hiding from their responsibilities after stripping every $ out of the company & now crying poor.

[krismiler]

Krismiler. You forgot to mention that the administrator pays themselves first. Handsomely.

KordaMentha did pretty well out of Ansett and certainly strung the process out long enough. Administrators fees make lawyers jealous, and even secretarial staff are charged out at hourly rates approaching a Captain's overtime pay. With $700-800 million in the bank and the creditors behind a wall, the administrators would have a fair bit of working capital to play with and not have to worry about loans or asset sales to keep things going. Potential investors might be waiting for a restructure in their favour before committing any money.

[DanV2]

Virgin Australia considers going into administration as Labor calls for government rescueThe grounded airline is in a trading halt after hiring insolvency and turnaround experts amid the coronavirus crisis



It is believed administration, under which control of the company would be handed to insolvency experts, is at one end of the range of options being considered by Virgin Australia.

Administrators have powers not available to company directors, including the ability to force all creditors to take a haircut under a deed of company arrangement. Administrators are also able to disclaim uneconomic contracts, freeing the company from onerous obligations.

To succeed, a deed of company arrangement requires support from half the creditors, by number and amount owed.



Source: https://www.theguardian.com/business/2020/apr/14/virgin-australia-considers-going-into-administration-as-labor-calls-for-government-rescue

[virginexcess]

Couldnt agree more,its so sad for all that turn up & give their all every day to keep this airline going.
Shame on the majority shareholders who now are in hiding & basically hiding from their responsibilities after stripping every $ out of the company & now crying poor.

The only person that ‘stripped’ anything out of this airline is John Borghetti. His major skillset was facillitating the transfer of large sums of money from gullible investors into his pockets.

[DanV2]

The only person that ‘stripped’ anything out of this airline is John Borghetti. His major skillset was facillitating the transfer of large sums of money from gullible investors into his pockets.

Hogan (EY) and SQ are just as responsible for being "yes" men to JB's CapEx spending, even rolling in the money themselves willingly for little return.

The then-management of EY and SQ are now gone (IIRC Hogan jumped before he got pushed from the EY job), and the current management of both entities could not care less about VA thse days as they shore up their own balance sheets.

EY and SQ both have a dismal record at overseas investments, so why people still consider SIA as a "so-called saviour" for airlines despite SQ's mediocre record overall is beyond me.

[PPRuNeUser0198]

Of the atrocious $5b debt that VA carries - $3b is secured to aircraft and $2b is secured to bonds. VA's current market cap. is ~$700m. A pittance. They're currently in talks with their 'shareholders'. They better get some cashola out of this - otherwise, they're toast. Simple as that.

[Double_Clutch]

Has the board reduced their pay further for the foreseeable future?

Last I hear was a 15% reduction but given what is transpiring, wouldn’t a larger sacrifice be forthcoming?

[Synergies]

The only person that ‘stripped’ anything out of this airline is John Borghetti. His major skillset was facillitating the transfer of large sums of money from gullible investors into his pockets.

What a "Game Changer" !!! Mostly losses during that "reign" !! :(

[Paragraph377]

Has the board reduced their pay further for the foreseeable future? Last I hear was a 15% reduction but given what is transpiring, wouldn’t a larger sacrifice be forthcoming?
They are inept creatures. The entire Board needs to be given a short walk. Get rid of them. They’ve fu#ked the place and their jobs should now be seen as redundant. Good riddance. Scurrah will be lucky to survive. He has had 12 months since IL Douche left VA to produce some magic. He didn’t do enough quick enough. That said, is it worth keeping him around? Who knows. Regardless, at the end of the day the CEO is the accountable executive. He knew he was inheriting a lemon and unfortunately for him it’s hit rock bottom due to mostly circumstances beyond his control. That said, he is the Captain and a good Captain always goes down with the ship. A lot of good people have and are being hurt by years of mismanagement. That’s a very sad thing.

[777Nine]

It's beyond sad that it has come to this. How can you f*** things up so badly to not make money in a market that has one other competitor. Like seriously. I feel for the employees of Virgin. I really do.

[Flava Saver]

I’m so annoyed my friends in VA are caught up in this. I really am. Rips me up.
I’m so annoyed that the (foreign) investors of VA and the board have got it to this point. And aren’t backing it up.
But why is PS pleading to the government to bail them out for $1.4 billion when they owe almost $5 billion in debt? I’m sorry... what an effing mess. It may not be his fault as such, but I’m sorry, my tax paying dollars don’t deserve to go to a foreign owned outfit that can’t get their stuff in order. I challenge anyone to explain to me why MY and everyone else’s taxes should bail an individual company out? And forget the two airlines needed to keep the air fair, whilst they’ve been here 20 years and are in this situation! But you haven’t paid much in the way of Aussie tax I’m afraid, and were quick to take advantage of the Ansett collapse many years ago.

Shut the doors. And another door will open. History has shown this with VA after Ansett. Hopefully an outfit can emerge that’s strategic enough, and not stupid like VA has been, and be a proper 2nd airline in Australia? Alliance has been a quiet achiever for 20 years and maybe they are the ones to step up for Australia.

[Sunfish]

It’s time to euthanize Qantas as well as Virgin. We need open skies.

[The Bullwinkle]

What a "Game Changer" !!! Mostly losses during that "reign" !! :(
I guess the government won’t help because they saw Il Deuce as an aviation luminary.
Why else would they have awarded him an AOM for services to aviation?

[George Glass]

And the prize for The Most Insensitive Drivel goes too.............

[CamelSquadron]

And the prize for The Most Insensitive Drivel goes too.............

The one who fumbles around in the dark at great depth at the bottom of the ocean.......

[Derfred]

It’s time to euthanize Qantas as well as Virgin. We need open skies.

I’d be interested in your hypothetical of how that would help. Is that a bit like getting rid of Ford and Holden? All domestic foreign owned? Good for Australia?

MEL-SYD: choose between Air Asia and Scoot. Both mobs paid $2/hr, but cheap flights. Sunny reckon’s it’s good for Australia.

[TBM-Legend]

Sunny reckon’s it’s good for Australia.[/QUOTE]
[QUOTE]


Oh if Sunny, with more posts than a dingo fence says it, it must be true. An expert on all subjects.

He the Oracle has spoken!

[Sunfish]

It may come as a surprise to some, but the Australian people do not just exist to be fleeced of exorbitant amounts of money to keep Qantas and its staff and shareholders in the style to which they have become accustomed.

If Virgin goes under than a rampant Qantas will screw the Australian captive customers for all they are worth......again! I can see that this is TBM's wet dream. A Qantas monopoly again, but this time not just International, domestic as well! Lets see; $1000 - Melbourne Sydney, $2000 - Melbourne Brisbane, $5000 to Perth!

Competitively priced air travel is essential to Australias economy, it is axiomatic that Qantas won't provide it without competition. If there is no competition then we need to open the skies.

[ruprecht]

...more posts than a dingo fence...

Love it :p

[Colonel_Klink]

It may not be his fault as such, but I’m sorry, my tax paying dollars don’t deserve to go to a foreign owned outfit that can’t get their stuff in order. I challenge anyone to explain to me why MY and everyone else’s taxes should bail an individual company out? And forget the two airlines needed to keep the air fair, whilst they’ve been here 20 years and are in this situation! But you haven’t paid much in the way of Aussie tax I’m afraid, and were quick to take advantage of the Ansett collapse many years ago.



Two very quick points - your tax payer dollars have already gone to a foreign owned outfit - in REX, who got the majority of the $200m regional subsidy announced a few weeks ago. And who have now put their hand out for more....but there doesn’t seem to be much commentary here about the nasty foreign owned REX airline taking government handouts. I’m not sure if Air North received any of that money either, but there is another foreign owned airline. And I think as of last year....QF was close to 40% foreign owned.

And whilst VA have not paid any Company tax - I can assure you they still contribute indirectly to the tax system. The NB pilots would pay at least $60m in income tax every year alone. Not to mention GST, fuel excise taxes, etc etc.

I hope you’re as passionate about some of these issues in 6 months time when QF (remember the 40% foreign owned airline) puts their hand out for money (from your tax payer dollars, which they haven’t contributed to much recently either care of that handy $2b write down of assets a few years ago....)

[Double_Clutch]

For those of you playing along at home, it seems that all airlines are part owned by overseas companies.

QANTAS is very much partly overseas owned. A little research goes along way

[Going Boeing]

The major issue with Virgin’s operations (IMHO) is that they have too many fleets in small numbers. When you have only 4-5 aircraft in a fleet, your investment in spares, maintenance, training costs, etc is far greater than when you have a fleet of 15-20 aircraft. The only way that I can see Virgin trading out of this is to reduce their operations to a single large fleet of B737’s with all the B777’s, A330’s, A320’s, ATR’s etc disposed of - with significant losses due to the depressed market. This will cause significant pain for many staff but, it s necessary to save the airline. All the best to Virgin staff.

[crosscutter]

For those of you playing along at home, it seems that all airlines are part owned by overseas companies.

QANTAS is very part part overseas owned. A little research goes along way

Probably those owners will reach into their own pockets in a NORMAL capital raising without creating a game of brinkmanship between various GOVERNMENTS and bondholders.

VAH has tremendous local support. It has good people. All the best.

[Cravenmorehead]

Absolutely agree, fleet consolidation, probably 737; trunk routes only.
If financing can be found there is hope.
Hang in there peeps, we're all in this together.
Craven

[normanton]

There should be some news today, or at opening tomorrow at the latest.

The announcement states "Virgin Australia wishes the trading halt to remain in place until the earlier of the release of an announcement by the Company or two trading days."

[pilotbm]

There should be some news today, or at opening tomorrow at the latest.

The announcement states "Virgin Australia wishes the trading halt to remain in place until the earlier of the release of an announcement by the Company or two trading days."

This is a standard release - a trading halt cannot be longer than 2 trading days.

[ECAMACTIONSCOMPLETE]

From The Australian “Scott Morrison Refuses to Budge on Bailout for Virgin”

The federal government has no *intention of being Virgin’s “white knight”, dismissing growing calls for it to intervene to save the airline or even take a temporary *equity stake to prevent its collapse.

Senior government sources fear ongoing speculation about the commonwealth bailing out the foreign-owned Virgin is counter-productive, crowding out any *potential market-led solution.

While the Morrison government is concerned about the *future of Virgin, and job losses in aviation, sources insist the JobKeeper package is designed to help businesses ravaged by COVID-19 and a Virgin-specific bailout, including taking an equity stake, won’t happen.

Scott Morrison told Sky News on Tuesday: “Our plan has always been about preserving businesses as the centre of the economy, not the government at the centre of our economy. Businesses are at the centre of our economy and we want to *ensure they get through this intact … so they can lead the recovery … on the other side.”

Sources told The Australian that, despite speculation and support from Labor, this would not include any special rescue package for Virgin. The government *believes a bailout for Virgin would open the floodgates for other struggling businesses.

Deputy Prime Minister *Michael McCormack has been trying to secure an agreement from the airlines to operate a *minimum number of flights *between major centres to maintain freight connections and carry Australians to their home town or city after *enforced quarantine.
READ MORE:Virgin in trading halt amid rescue hopes (https://www.theaustralian.com.au/business/aviation/virgin-australia-in-trading-halt-amid-rescue-hopes/news-story/824296b891d92d2a8dc9bb512ff8a431)|It takes two to keep the air fair (https://www.theaustralian.com.au/business/media/it-takes-two-to-keep-the-air-fair-and-the-airfares-fairer/news-story/3117841a4bec513c1bcbcc0ed2764181)|Canberra in Virgin debt dogfight (https://www.theaustralian.com.au/business/canberra-in-debt-dogfight-with-virgin-australia-bond-holders/news-story/4ba9c5144fc6858a410e5f823ab66d9b)|Virgin races to restructure debt (https://www.theaustralian.com.au/business/dataroom/virgin-australia-appoints-houlihan-lokey-for-debt-restructure/news-story/950a4ba4be601ca047587310ff265ba0)But a planned announcement on Tuesday was progressively pushed back as Virgin Australia sought assurances it would not be left out of pocket as a result of the flights. It is understood the airline has been unhappy with relief measures announced by the government to date.

Despite Mr McCormack’s promise that $159m of a $715m fee relief package would be paid to Qantas and Virgin, neither airline has yet to receive any money.

With flying reduced to almost nothing, Virgin estimated the total cost benefit of the package from February 1 to September 30 would amount to less than $70m.

For the second time this month, Virgin shares were placed in a trading halt on Tuesday pending an announcement about financial assistance and debt restructuring by Thursday.

Virgin chief executive Paul Scurrah is working on a restructuring plan with investment bank Houlihan Lokey and, with the backing of Labor, he *believes the airline is crucial to Australia’s economic recovery and the government should take an *equity stake to secure its future.

But the Prime Minister and Josh Frydenberg insisted any further support for the aviation sector would be spread across the industry. “We haven’t been picking any winners or picking any favourites here,” Mr Morrison told the Nine Network. “What we’ve been doing is ensuring we’re giving sector-wide support. So we’ll continue to deal with the sector on a sector-wide basis.”

The Treasurer also ruled out a Virgin-specific rescue package and suggested talk of the airline’s collapse was “speculating about the future”.

“Nobody knows where those issues will end up,” Mr Frydenberg said. “Australia’s been well served by having two major airlines operating in the domestic market. But Virgin and Qantas are both publicly listed companies, both with substantial shareholders.”

[B772]

Houlihan Lokey are still looking at the books; especially the assets and due dates for the liabilities.

[-41]

How many $ million a year do you think Branson pulls out of VAH in fees for the franchise, it would be around the same amount as the loss last FY.

[wheels_down]

I’m nervous after that PM statement. It’s clear in that statement from the PM that they are not assisting. Bit hard to say that, then pull some 11th hour deal.

The Government isn’t going to help. Looks like a Shorten government would have.

There is only really one option left. Branson to give them a loan. That’s the last desperate measure before calling it a day. He didn’t save Virgin America.

I’m feeling everyone’s pain. I’m quite angry actually. It didn’t have to end like this. 20 years. What an absolute waste and will be the worst corporate disaster in my lifetime. Bryan and Borghetti need to be stripped of every single cent to their names.

We don’t want some bottom feeding loco from the far north taking over. I hope David Neeleman sees an opportunity to bring his pride and joy down under, because my god it would be a weapon here. That’s the sort of carrier we need here, what Virgin should have been, and what this market needs. Not a Lion or Air Asia.

[ampclamp]

[QUOTE][/How many $ million a year do you think Branson pulls out of VAH in fees for the franchise,QUOTE]

I believe he has foregone those fees whilst the crisis goes on.

I also believe he propping Virgin Atlantic with a few hundred million.

[ampclamp]

Well, that quote from Morrison is fairly clear cut.

Unless "industry wide" is code for a rescue for all equally. However i cannot see intervention as Virgin stands right now. As much as I want them to, I can see why they would not.

Administration likely if it goes on much longer. Major share holders disinterested in further cash being injected.

If it goes into admin, I believe the administrators can force holders to take a haircut and cut payments etc and hopefully get a structure that can live on with as many staff as they can carry.

[Paragraph377]

Perhaps Scotty from Maketing, the ‘speaking in tongues’ Pentecostal zealot will use prayer and a Hillsong singalong to solve all of Australia’s economic issues?? C’mon Scomo, let it rip mate, apparently your personal sky fairy will help you and us!!

[crosscutter]

The bondholders will be very keen to do a deal. Maybe a debt repayment : equity swap. There are plenty of options. I don’t mean to give false hope rather highlight a government (AUS or SIN) loan is not the only option.

Wealthy individuals want VAH to survive. White knights do exist. This trading halt brings to a head these considerations. You don’t buy a house at auction when you know there will be a mortgagee sale for the same house in a few weeks.

Administration is not a death spiral, especially if some of the debt can be restructured, which is exactly what is being negotiated/proposed.

[mmmbop]

For those of you playing along at home, it seems that all airlines are part owned by overseas companies.

QANTAS is very much partly overseas owned. A little research goes along way

Double Clutch, Virgin isn't 'partly owned by overseas companies, it's pretty much fully owned!

Qantas has a 49% cap on foreign ownership.

Virgin is over 91% foreign owned. My taxpayer dollars aren't going to be used saving a grossly mismanaged company that is over 91% foreign owned.

The problem for Virgin's survival is two fold. The foreign ownership, and the core belief in the free market rather than government ownership of assets. The deal needs to be done so that the Chinese,SIA,Etihad& Branson are removed from the company. So if that means it has to collapse before being reborn, I'd suggest that is the government's view.

I'd also suggest that Virgin isn't going to disappear (I hope not) and that a certain deal will be done. But we will just have to wait and see.

[Colonel_Klink]

Double Clutch, Virgin isn't 'partly owned by overseas companies, it's pretty much fully owned!

Qantas has a 49% cap on foreign ownership.

Virgin is over 91% foreign owned. My taxpayer dollars aren't going to be used saving a grossly mismanaged company that is over 91% foreign owned.

The problem for Virgin's survival is two fold. The foreign ownership, and the core belief in the free market rather than government ownership of assets. The deal needs to be done so that the Chinese,SIA,Etihad& Branson are removed from the company. So if that means it has to collapse before being reborn, I'd suggest that is the government's view.

I'd also suggest that Virgin isn't going to disappear (I hope not) and that a certain deal will be done. But we will just have to wait and see.

It’s interesting when people refer to the free market - because the market is exactly the opposite to that right now. In fact there is no market because of (the correct) government actions.

And for those that think the free market is the answer to everything - I assume you don’t support the money on offer to regional airlines? Or the money being spent keeping childcare centres open. Or the money being given to universities to help them offset the massive loss in revenue from foreign students. I also assume you’ll hand back any job keeper subsidy you (or your company) is receiving because sure as hell having the government chip in $3k a month per employee isn’t a free market either.

[wishiwasupthere]

Virgin is over 91% foreign owned. My taxpayer dollars aren't going to be used saving a grossly mismanaged company that is over 91% foreign owned.

Rex is 100% foreign owned yet I haven’t heard the same amount of commentary regarding them receiving government assistance.

[Toruk Macto]

Hopefully it’s a poker game at the moment , bluffing the owners that they are about to lose everything if they don’t pony up ? Their airlines not operating to Australia so no income from any extra investment? Scomo can easily say something changed and is now willing to help but that’s not the case today it seems .
Good luck .

[chookcooker]

It’s interesting when people refer to the free market - because the market is exactly the opposite to that right now. In fact there is no market because of (the correct) government actions.



bingo.
I feel like I’m on crazy pills when anyone brings up “free market” at the moment.

to quote the polarising Alan Jones ”the government has put the market in a coma, it needs to pay for the life support”

[mmmbop]

It’s interesting when people refer to the free market - because the market is exactly the opposite to that right now. In fact there is no market because of (the correct) government actions.

And for those that think the free market is the answer to everything - I assume you don’t support the money on offer to regional airlines? Or the money being spent keeping childcare centres open. Or the money being given to universities to help them offset the massive loss in revenue from foreign students. I also assume you’ll hand back any job keeper subsidy you (or your company) is receiving because sure as hell having the government chip in $3k a month per employee isn’t a free market either.

No Colonel. Not my belief, but what the Liberal Party is built around. Hence why people comment "its obvious the Labor Party would have bought out Virgin wheres the Liberal Party isn't going to"

The free market means minimum intervention by the government. Despite the narrowing of the difference, LNP and ALP still do differ here slightly. It doesn't mean no intervention. So hence why the government's current intervention strategies have been what they've been. e.g. the $715m package.

[longjohn]

I’m nervous after that PM statement. It’s clear in that statement from the PM that they are not assisting. Bit hard to say that, then pull some 11th hour deal.

The Government isn’t going to help. Looks like a Shorten government would have.

There is only really one option left. Branson to give them a loan. That’s the last desperate measure before calling it a day. He didn’t save Virgin America.

I’m feeling everyone’s pain. I’m quite angry actually. It didn’t have to end like this. 20 years. What an absolute waste and will be the worst corporate disaster in my lifetime. Bryan and Borghetti need to be stripped of every single cent to their names.

We don’t want some bottom feeding loco from the far north taking over. I hope David Neeleman sees an opportunity to bring his pride and joy down under, because my god it would be a weapon here. That’s the sort of carrier we need here, what Virgin should have been, and what this market needs. Not a Lion or Air Asia.

Maybe your lifetime Wheels, but for a number of those here (including VAI employees) there was a far larger Airline collapse in 2001, when after 65 years, an aviation icon collapsed. Your 20 years is not quite a third of that.

Like today, the liberal government of the time fumbled and then refused to help. Qantas stirred the pot and the unions merely sought to pursue their open agenda. The Labor government of the time resorted to scoring points.

In the end 16000 people lost their jobs.

Within a short space of time Virginblue and Qantas had filled the gap. The Air was much fairer than it had been before and more aviation jobs were created than previous.

Since the capacity war of 2013, VAI and QF have both been propping up yields in the domestic market with constrained capacity. For QF times have never been better. For VAI, even under these conditions they have struggled to make a profit.

Time for a new entrant, unconstrained capacity and more jobs.

My advice, employees need to think about their entitlements before Scurrah and his band burn through it all.

[normanton]

to quote the polarising Alan Jones ”the government has put the market in a coma, it needs to pay for the life support”
You just lost all credibility.

[Chad Gates]

I do feel that SM can’t really say anything else at the moment. He wants SQ (or at least one of the investors) to come forward with the cash. It looks to me like a bit of brinkmanship. If he indicates he will provide the assistance, the investors wallets will close immediately. 11 hour maybe.

[chookcooker]

You just lost all credibility.

Cheers for that gem of an insight champ.

[Vindiesel]

AFR Street Talk reporting that all major shareholders unwilling to put in more equity.

https://www.afr.com/street-talk/virgin-shareholders-pass-up-deal-search-moves-to-white-knights-20200415-p54jwg

[Blueskymine]

I work for the other mob, but I wish you all the best and understand it must be absolute hell what you’re feeling right now. Especially the ones who went through it before. Or the ones like me who are stood down with a family wondering how the mortgage will look towards the end of the year.

What I can say is the government introduced these measures and strangled our airline industry. It completely restricts our ability to trade. Airlines need forward bookings and consumer confidence.

So therefore there should be a sovereign backing of debt for our airlines, ticket guarantees for consumer confidence and if the airlines can’t meet their debt when this is over, then so be it. However right now they should be afforded life support as necessary to hibernate and be ready to turn on again in the future.

Yes, the government can’t pick winners or losers, but it’s the government who’s done this to its companies and citizens to save its health system and liability. So it’s the government who needs to sort it out.

[ECAMACTIONSCOMPLETE]

AFR Street Talk reporting that all major shareholders unwilling to put in more equity.

https://www.afr.com/street-talk/virgin-shareholders-pass-up-deal-search-moves-to-white-knights-20200415-p54jwg

It’s behind a paywall, any chance of a copy paste :)